Sections

Irish DB schemes strengthen funding as reform looms

Related Categories

Roughly three-quarters of Ireland’s defined benefit (DB) schemes meet the minimum funding level, according to data collected by The Pensions Authority.

The 74% of schemes meeting the standard marked an improvement on last year’s figure of 70%, the Irish regulator reported.

However, larger schemes were less likely to meet the requirement, the authority said. Of the top 50 biggest DB schemes, 28 of them (56%) met the funding standard.

Irish pensions law requires DB schemes to hold sufficient assets to meet transfer values for all members along with the estimated costs of winding up.

Across 628 pension funds that submitted an annual actuarial data return (AADR), the regulator reported an 11% decline in the number of DB schemes with active members still accruing benefits, from 503 to 447.

On aggregate, Ireland’s DB system was 104.6% funded, with €60.8bn of assets and €58.1bn of liabilities, according to data submitted to the regulator by 31 March.

There were 163 schemes not meeting with the country’s funding standard, The Pensions Authority said.

While the “vast majority” had proposals in place to meet the funding standards, the regulator said there were three schemes with no funding proposal. These ran the risk of regulatory action, the authority said, which could include an enforced wind-up or benefit cuts.

Liability analysis showed that pensioners accounted for 58.5% of total liabilities, despite only making up 16.2% of DB scheme membership. Actively contributing members accounted for 17.7% of the total, the regulator reported.

Aggregate asset allocation data showed a shift away from equities and government bonds towards alternative assets such as property, absolute return funds, and hedge funds.

Allocation to equities fell to 32.5%, the regulator said, compared to 35.8% in 2015 and 41.7% in a year earlier.

Asset allocation of Irish DB funds, 2015-16

Irish DB schemes' aggregate asset allocation

Source: The Pensions Authority

While the data was only correct to last year, and much of it was more than 12 months old according the Pensions Authority, the overall picture was a positive one.

The Irish DB sector has been in the spotlight in recent months as politicians have sought to improve regulatory protections for savers to stop sponsors walking away from schemes and leaving them underfunded.

Politicians are set to debate reforms later this year.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2383

    Asset class: Residential Property.
    Asset region: Ireland.
    Size: EUR 10m.
    Closing date: 2017-12-18.

  • QN-2385

    Asset class: Liability Driven Investment.
    Asset region: Europe.
    Size: Size: EUR 1 Billion, Liability size: EUR 3 Billion.
    Closing date: 2018-01-08.

  • QN-2386

    Asset class: Fixed income.
    Asset region: Global developed markets.
    Size: CHF 500 -1000m.
    Closing date: 2018-01-15.

  • QN-2388

    Asset class: Private Equity.
    Asset region: Global Developed Markets.
    Size: $200m.
    Closing date: 2018-01-05.

  • DS-2392

    Closing date: 2017-12-21.

  • QN-2393

    Asset class: All/Large Cap Equities.
    Asset region: Europe.
    Size: EUR 200m.
    Closing date: 2017-12-21.

  • QN-2394

    Asset class: Real Estate Industrial.
    Asset region: Europe.
    Size: EUR 10m.
    Closing date: 2018-01-04.

Begin Your Search Here