The Government has introduced measures to address the funding difficulties faced by many pension funds and to bring the Irish pensions regime into line with European rules, writes Dominic Coyle.

However, the Social Welfare and Pensions Bill 2005 shies away from some of the more fundamental changes sought by the pensions industry.

The Bill will make permanent the short-term measures allowing underfunded schemes more time to get back on course. It will also widen the grounds through which underfunded schemes can apply for such dispensation.

But the existing position on funding will broadly remain in place.

Eligibility requirements on pension fund trustees will tighten, with undischarged bankrupts, people restricted from acting as directors and those convicted of offences involving fraud or dishonesty barred.

Pension funds said the measures announced yesterday did not go far enough to address the problems facing the Irish pension system

"While the Bill goes some way to addressing the problem, we don't believe that it will solve all the current issues," said Mr Paul O'Brien, chairman of the benefits committee of the Irish Association of Pension Funds (IAPF).

He said that the Bill "effectively endorsed a continuation of the current position with some adjustments".

The Bill tinkers with Personal Retirement Savings Accounts (PRSAs). Specifically, it doubles the cooling off period for people who sign up for a PRSA from 15 to 30 days.

In addition, it raises to €10,000 from €4,000 the amount that can be transferred to a PRSA from an occupational scheme without the preparation of a certificate of comparison and a written statement.

The Bill also introduces several changes to ensure the State complies with the requirements of the EU Pensions Directive, which must be implemented in all member-states by September 23rd. These include rules governing the establishment of cross-border pension schemes.

It also gives the Pensions Board, which regulates Irish schemes, power over such schemes. This includes the possibility of forbidding Irish employers to contribute to cross-border schemes based outside the State if it is satisfied that the scheme does not comply with Irish social and labour law.

The IAPF criticised the restrictive nature of rules on cross-border pension schemes. Mr O'Brien queried why such schemes would have to be fully-funded at all times when schemes within member-states were allowed to fall below the 100 per cent funding level at times, provided they could agree a plan with the regulator to restore the fund to full funding.

"This part of the Directive would seem to be a disincentive to multinational employers establishing pan-European defined-benefit pension arrangements."

The Bill will also allow the ministers to introduce regulations governing investment choices and to permit schemes to borrow in certain circumstances, providing it is for liquidity purposes. Otherwise, the Bill prohibits schemes from borrowing or acting as a guarantor for loans.

Under the EU rules, schemes will have a maximum of just three years between actuarial funding certificates, six months shorter than at present.