IRELAND - Trustees of defined contribution pension schemes at Irish universities are considering recommending their members move into defined benefit schemes following a recent decision by the Irish government to take responsibility for the assets and liabilities of ‘semi-state' bodies' pension plans.
Pensions industry sources say they have become aware that trustees of the DC schemes operated on behalf of universities - which are technically state-owned in Ireland - may consider altering the terms of their schemes so members can take advantage of the effective funding guarantee the government has now offered.
Earlier this month, the Irish government said it would "take into the Exchequer" and assume the assets and liabilities of privately-run defined benefit schemes of organisations operating as a division of the State.
The change relates to the Institutions for Occupational Retirement Provision (IORP) directive, which states organisations must ensure they have plans in place to ensure they meet their pensions liabilities.
Several semi-state organisations are said to have informed the government they needed a substantial increase in funding to meet their liabilities so the government has in the interim acted to meet this need by taking them into the State's coffers and budgetary requirements.
Although no university scheme has yet made such a move, experts are now concerned once that shift has been completed, the schemes will then be converted to pay-as-you-go schemes and liability, leaving liability to fall on the taxpayer as well as removing assets currently managed by the Irish investment industry.
Data previously released by the Irish Association of Investment Managers (IAIM) indicated the current total assets could be worth approximately €5bn, although the exact figures is unknown, while the unfunded liabilities could be a further €2bn.
"If you take our assessment of that the assets are worth €5bn as well as the unfunded, there is a possibility this change will be worth more than a third of the assets of the National Pension Reserve Fund," said Fran O'Dwyer, chief executive of IAIM.
Any such move would therefore contribute to the Irish government's deficit under the European Commission Maastricht criteria.