Two thousand and seven looks to be another busy year for pensions. Last year was an extremely active year with major reports completed by the Pensions Board under tight timeframes, including the National Pensions Review Report, Special Savings for Retirement (or Mandatory) report and the Trusteeship Report which is due for release shortly.

In 2007, the main issues for IAPF will be our involvement in the Green Paper on Pensions.

The Irish government, with the social partners, the employer representative group IBEC and ICTU representing the trade unions, agree on the importance of pensions and that it has to be dealt with as a priority issue.

They therefore have decided that they need to determine the long-term shape of the overall pension system. IAPF is very supportive of this Green Paper and the need to identify the policy changes required to drive the agenda of increasing coverage and adequacy of pensions. It is absolutely critical that we get this right and thus the need for time to allow for this. Quick solutions will only act as a bandage to cover the cracks.

While the above reports have helped to identify the issues, we would be concerned that there should be adequate time given and this may not be sufficient under a timetable that asks for the Green Paper to be finalised by this spring. IAPF, of course, is more than ready to engage and support this process in every way to contribute towards meeting the need for action to be taken.

IAPF had already participated in the meeting organised by the Department of the Taoiseach in November. In our presentation, we highlighted the inefficiencies in the Irish annuity market.

The impact of annuities on the pensions environment is considerable. It impacts in two main areas. Firstly, as annuities are a key driver within the minimum funding standard, which require that pension schemes have to hold sufficient reserves to buy annuities, even though they rarely do.

Secondly, members of defined contribution (DC) schemes are forced to buy annuities and thus bear the major cost of purchasing them. Since our meeting, the department has commissioned further research in the area and we very much welcome this.

IAPF believes that actions can be taken to reduce the impact on pensions and these should be explored. We have recommended the setting up of a State Annuity Fund for defined benefit (DB) schemes and Approved Retirement Funds (ARFs) should be extended to DC schemes. We will be pursuing these issues again in 2007.

IAPF would see the following areas as key under the Green Paper review:

o More coverage - IAPF is not yet convinced that mandatory pensions is the best way and favour instead greater incentivisation;

o More adequacy;

o Making it more attractive to save by simplifying pensions;

o Not damage the current voluntary pension provision system;

o That Ireland remains competitive.

Benefit design is also a key issue to be reviewed under the Green Paper. There
is a growing understanding of the difficulties faced by employers in maintaining their pension schemes. Improved mortality, lower interest rates, the funding standard and FRS17 have all impacted severely on employers. There are areas we all need to focus on and IAPF will be reviewing them in the near future.


he IAPF will launch its Pensions Trends survey in early 2007. This survey will provide an insight into how other schemes currently operate and the future pension changes they anticipate. The findings will also furnish IAPF with important data to feed into the government's Green Paper.

The 2006 Asset Allocation survey will be launched in January. Each year, this survey details the size, asset allocations and asset returns of pension investment assets in Ireland (excluding the National Pensions Reserve Fund).

We are also reviewing other research projects to be completed in 2007.

IAPF will continue to work in 2007 on behalf of group DC schemes and represent a key area of discrimination. In two recent reports produced by the IAPF, we have highlighted two pressing issues in relation to group DC schemes.

We believe that government policy discriminates against PAYE workers compared to PRSA holders, company owners or self employed. This latter group have the option instead of taking a pension to buy an ARF. DC group pension scheme members have only one option to take a pension and therefore do not have access to more flexible options on retirement.

IAPF, as the representative body for pension schemes in Ireland, will continue to be actively involved on behalf of our pension scheme members in seeking to influence the direction of pensions policy.

Nora Finn is chief executive of the IAPF, the Irish Association of Pension Funds in Dublin