Pensions rethink urged for changing market

Irish pension schemes founded in the 1970's and 1980's are becoming increasingly inadequate in the new millenium, delegates at a conference held in Dublin heard today.

Organisations are being urged to make sure that pension provisions are appropriate in a changed economic climate.

The theory 'that one size fits all' is now redundant.

Figures reveal there has been a 70% reduction in the number of Defined Benefit Schemes (DB) operating in the last ten years.

With the shift from Defined Benefit schemes there has been a marked increase - over 30% - in the number of companies opting for the Defined Contribution (DC) option.

Commenting on the current trends in the Irish market, Paul Webb, Senior Consultant, Mercer Human Resource Consulting, said: "Rather than automatically opting for the DC solution over the DB solution, we are finding that the answer for many organisations, is somewhere in the middle.

"The average contribution rate to DC Schemes in Ireland is currently about 10% of salary."

This level of funding does not adequately provide for a suitable retirement income where contribution levels of 20% upwards are required.

"If contribution levels do not improve, the burden on the economy and public services in years to come could be significant," he added.

Roz Briggs, Senior Consultant, Mercer Human Resource Consulting said: "Companies need to be proactive on the pensions issue. There are real workable solutions available to companies if they wish to avail of them.

"The alternative - 'sticking your head in the sand', is just not an option."