Pensions seminar highlights problems facing Irish trustees

Irish Pension funds have been through a "pensions hurricane" caused by a combination of occurrences which has left some beyond repair, the Irish Association of Pension Funds (IAPF) heard today.

A major issue facing pension funds is a recent interpretation of the minimum funding standards required by Irish Regulation

According to Alan Broxson of Irish Pensions Trust Forum this has significantly increased the hole in any fund already paying pensions.

“The problem has been exacerbated by the fact that the regulator requires such shortfalls to be made up over a maximum of 10 years," Broxson said.

“The size of the problem is too big for many employers to fix over that timescale and they are being forced to cut back on the pension promise. It is ironic that legislation designed to protect members is being applied in such a way as to have the opposite effect," he added.

Experts are now predicting that Irish pension funds may follow the trend evident in the UK towards the closure of their defined benefit pension schemes to new entrants.

Speaker David Jones of Lane Clark & Peacock highlighted the pitfalls faced in the UK market to date.

"The last few years has seen an unprecedented shift in the UK occupational pensions landscape, with the majority of defined benefit (final salary) pension schemes closing their doors to new entrants,” Jones said.

“Most schemes were closed to reduce pension costs and risks. But closure does not solve things overnight - rather it creates a different set of problems,” he concluded.

Established in 1973, the Irish Association of Pension Funds (IAPF) is a non-profit, non-commercial organisation.

Its members provide retirement security to over 200,000 employees, pay pensions to nearly 70,000 people who have already retired and are responsible for over €50 billion in retirement savings.