IAPF hears pension schemes are potential 'time bomb'

Raymond McKenna of KPMG People Strategies has said that approximately 237,000 Irish people with defined contribution pension schemes are sitting on a potential pensions time bomb and largely unaware of it.

McKenna is a member of the Association of Pension Funds Benefits Committee, and was speaking at an IAPF conference on 'Pensions Adequacy and Governance' in Dublin today.

He said that IAPF figures show that the average contribution by employees and employers to a defined contribution scheme is about 10% of income.

"IAPF research finds that and that it should be more like 15 - 25% of income depending on age and individual circumstances."

He warned that defined contribution members needed to be more aware of the fact that retirement income was also threatened by risks in terms of investment market performance and interest rates.

He called for greater education in relation to the risk of inappropriate levels of contributions, investment strategy and low interest rates.

Mr Patrick Burke of IPT Pension Trustees and Chairman of the IAPF Trustee Forum Steering Group issued a warning about the threats to the future of member benefits caused by short term statutory funding requirements and accounting standards.

Burke suggested that the interests of many scheme members could be served by joint efforts to modify these standards prior to their full introduction.