Irish Pension funds have been through a “pensions hurricane”, which has left some beyond repair, according to Alan Broxson, director of the Irish Pensions Trust .and former EFRP chairman.
Addressing the Irish Association of Pension Funds (IAPF) in Dublin, Broxson, who is a former chairman of the European Federation for Retirement Provision, said a major issue facing pension funds was interpretation of the minimum funding standards required under Irish regulation. “This has significantly increased the hole in any fund already paying pensions. The problem has been exacerbated by the fact that the regulator requires such shortfalls to be made up over a maximum of 10 years.
“The size of the problem is too big for many employers to fix over that timescale and they are being forced to cut back on the pension promise. It is ironic that legislation designed to protect members is being applied in such a way as to have the opposite effect.”
Broxson also warned that public service pension funds had been severely hit by the size of pay growth over recent years and that their problems would be considerably worse when the full effect of benchmarking bites, he noted that such funds were exempt from the full requirements on funding.