Call to end pensions ‘apartheid’

A call to end the “apartheid” which gives defined benefits pension holders a potential €64,000 a year advantage over those in defined contribution schemes, has been made by IFG Corporate Pensions.

Director of corporate pensions with IFG Corporate Pensions Fionán O’Sullivan, said the system favours those in defined benefits (DB) pension arrangement — public servants, bankers and employees of large long-established firms — over those in defined contribution (DC) schemes — typically self-employed and workers in newer firms including multi-nationals.

“The current cap of €2.3m allows a DB member to have a pension of €115,000pa as the rules allow for a factor of 20:1. In the ‘real world’ annuity rates of between 30:1 to 45:1 apply to DC members and therefore their maximum pension can only be between €51,000-76,600pa.