Almost 80% of Ireland's defined benefit (DB) schemes have already closed or are likely to close to new employees, a new survey revealed at the Irish Association of Pension Funds (IAPF) annual benefits conference today.

Over two thirds (67%) of Irish companies have already closed their DB schemes to new members and another 12% consider it likely, according to the study. In the last 18 months alone almost 20% of firms have closed their scheme.

Marie Collins, chairman of the IAPF, said: “Unlike other challenges that pension funds have faced, a solution for this crisis is in the hands of our Government. It is counter intuitive for any Government, that has known for many years that it is facing a pension crisis, to appear to do very little to protect the pension savings of scheme members and to continue to threaten to remove tax relief from ordinary workers who are doing the right thing and saving for their retirement.”

Over 70% of DB schemes are in deficit when measured against the minimum funding standard. Collins said the IAPF has recommended and made strong representations to Government on the introduction of a new Sovereign Annuity.

The IAPF Chairman added: “Time is running out to stop the wide scale destruction of DB savings. Let us not inflict any more hardship on the next generations. If we destroy what is there now, what will be left is a generation of workers, other than public servants, facing retirement hardship and depending on a much smaller workforce to support them in their retirement.”

The IAPF conference was also told that individuals and employers must embrace a more positive and flexible attitude to a later retirement age and this will require a fundamental shift in social attitudes. US speaker Bob Moreen, who heads up Mercer’s global pension plan design consulting activities, said that a retirement age of 70 or more may eventually not only be financially necessary but socially desirable.

Referring to the financial imperative for a higher retirement age he pointed out that in 1972 Irish people spent the equivalent of about 30% of their working lives in retirement. By 2010 this had increased to almost 50%.

He added: “There are proposals to introduce auto enrolment pension schemes in Ireland. While these can only help, by raising coverage beyond the current 55% and adding to benefits, it's not clear that this alone will be sufficient to produce the additional funds required to meet today’s life expectancy rates and today's evolved standards of expectations of a 'good retirement'.”

Share Story: