IRELAND - Irish defined benefit (DB) schemes require the largest reserves out of 10 European countries, data from Hewitt has revealed.

Falling German and French bond rates have seen the cost of an Irish annuity increase dramatically, with it now priced 33% above the average European rate.

Irish regulations state that a DB scheme's reserves must be based on the cost of buying an annuity.

The consultancy calculated that for a single life pension of €1,000 a year, an annuity worth €17,692 was required, compared with €13,350 on average when examining other European countries such as Italy, Austria and Switzerland.

Rachael Ingle, director at Hewitt, said the current situation would make it harder for pension funds to submit their funding proposals to Ireland's Pension Board in time.

"The recent increase in annuity prices is making it more difficult for trustees and employers to finalise funding proposals and Section 50 orders by the statutory deadline, which for many schemes is 30 November," she said.

Ingle said that if sovereign annuities could be used as a benchmark under the Pensions Act, then the price would fall dramatically.

"To take the example of a 65-year-old male, the reduction would currently be in excess of 30%," she said.

"Allowing for a 25% reduction would give a figure of about €13,300, similar to the average in our survey."

After Ireland, the Netherlands charged the highest price for annuities, followed by Spain and Sweden.