Risky investments threatening DB schemes

The status of defined benefit (DB) pension schemes remains “a fragile one”, the Pensions Authority has said, noting that too much investment risk is being taken by trustees in order to meet liabilities.

In the authority’s 2014 annual report published yesterday, said pensions regulator Brendan Kennedy, while improvements — by way of risk reduction — have been noted amongst pension schemes, the overall landscape is one where many trustees still rely on equities outperforming bonds to meet their liabilities.

“This strategy entails considerable risk, which will fall especially on the younger members of the schemes,” he said. “High risk is not an appropriate approach to take where the benefits cannot otherwise be afforded.