(June 19, 2013) -- The Irish Pension Board has serious concerns over the sustainability and management of retirement assets, according to the Ministry for Social Protection.
The board found that defined contribution (DC) plans must become the future for Irish retirees, and that trustees needed to better understand the finances and risk factors of the pension schemes.
The pension board represents 760,620 members in 61,232 occupational pension schemes. Of this number, 527,681 members are in 1,040 defined benefit (DB) schemes and 232,939 members are in 60,192 DC plans. The board highlighted the need for consolidation into fewer schemes of both types for simpler fund management.
Brendan Kennedy, CEO of the organization, said: “The board’s view is that members would benefit if smaller schemes were discouraged and it is considering a number of initiatives in this area. The board will consider making legislative recommendations to the Minister for Social Protection on this matter.”
The Pensions Board has worked to restore funds to which some employers have failed to contribute, resulting in a significant number of prosecutions and convictions. In 2012, there were 15 convictions, in which more than €1.3 million were restored to schemes.
The board recognized the need to move to DC plans following the global trend. “The work of the board must also reflect the increasing importance of DC plans pension savings. The objective of the board’s work in this area will be to ensure that the outcomes for contributors are as good as possible. The most important issues in DC are investment risks and losses, contribution inadequacy and costs,” said Kennedy.
The CEO was also concerned about the role trustees had on pension boards and their overall scheme knowledge. He said: “We continue to have concerns about the understanding that some DB trustees have of their role and responsibilities. The task of trustees is to manage the scheme to ensure as far as possible that members and beneficiaries receive the benefits promised under the scheme rules. This requires trustees to understand the finances of their scheme and the risks that it faces, and to manage the scheme to mitigate these risks.”
The board’s long-term goals are to improve pension trustee awareness, consolidate pension, schemes, and continue to the transition to DC plans, while minimizing waste and corruption, Kennedy affirmed.
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