Irish government: pensions have time to recover
IRELAND - The significant losses sustained by Irish pension funds over the last three years have been commented on by Ireland’s minister responsible for pensions.
Speaking at the World Pension Association conference in Dublin, social and family affairs minister Mary Coughlan said she was thankful that pension funds in Ireland are relatively immature and do not have the same requirements for income to match fixed liabilities as is the case with more mature funds. “This gives time for Irish funds to recover when the market turns.”
She said she had recently introduced short-term measures to allow the Irish regulator, the Pensions Board, flexibility to deal with pension schemes having difficulties with meeting the funding standard requirements for defined benefit plans.
“The intention is to give scheme sponsors financial breathing space to respond to the current funding difficulties and hopefully to reduce the need for employers to close DB schemes.”
She added that unfortunately the losses experienced by funds have brought a short-term focus on what is a long-term investment.
“While it is certainly true that there have been losses, taking a longer term view, say the past ten years, funds have returned average annual gains of 8.7%.”
She also referred to the take-up of the recently launched personal retirement savings accounts or PRSAs, a low-cost vehicle designed to increase private pension coverage. She said she was pleased with the progress that had been made to date on PRSAs. The Pensions Board has approved a significant number of products and these have been coming to the market over the last couple of months, she said.
“Providers are also putting in a considerable advertising effort which I very much welcome.” This will help to raise consciousness and awareness in the pensions area, she added.
“We are working extremely hard to increase pensions overage by the voluntary route, however as I have said before if at the end of three years when we are required to review our strategy we find that the voluntary approach has not delivered the increase in coverage we require then other measures will have to be considered.”
According to Mercer Investment Consulting, the average Irish pension managed fund fell 4.9% in the first quarter of this year. That came on the back of a 21% decline in the year to the end of February.