The Pensions Authority in Ireland remains concerned by the level of investment risk taken by Irish defined benefit schemes.

Publishing its latest review of statistics for DB schemes, the authority published information for 560 schemes that were subject to the funding standard provisions of the Pensions Act 1990 as at 31 March 2021. Of these, 374 (376, 2019) are current schemes with active members, 184 (194, 2019) are frozen schemes and two (12, 2019) schemes are in wind-up.

“The DB asset and liability data reported in this summary show very little change from the figures reported in recent years, and so the authority remains concerned about the level of investment risk inherent in DB provision.

“As the authority has previously stated, this risk is not borne equally by all scheme members: it is mostly concentrated on members who have not yet retired. This group is getting smaller over time and, as a result, the risks are becoming more and more concentrated. The Authority notes that the percentage of DB scheme assets classified as “other” is increasing steadily year on year.”

In 2019, 22.7 per cent of assets were categorised as other, but this has increased to 23.2 per cent for 2020. For other asset classes, equities remained the same, whilst EU sovereign bonds increased to 35.3 per cent from 34.8 per cent. Other bonds rose to 9.8 per cent, from 9.6 per cent. Property has also decreased from 4.8 per cent to 4.4 per cent, and cash has decreased from 3.6 per cent to 2.7 per cent.

Of the schemes, there are 310,640 members in total and schemes have liabilities totalling €61bn. Fifty-nine continuing DB schemes did not satisfy the funding standard provided for in section 44(1) of the Act at the effective date of their most recent Annual Actuarial Data Return (AADR), which is equal to 11 per cent compared to 14 per cent in 2019.

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