Over 100 Irish defined benefit pension schemes failed to meet the required funding standard in 1997, according to the Irish Pensions board in its annual review. And as a result of funding problems a number of Irish schemes have switched to DC provision, according to Eric Plunkett of the board’s investigations department.
Irish schemes set up after 1 January 1991 are obliged to resubmit actuarial funding certificates for DB liabilities to the board every three years. However 113 of the 2,242 subject to review in 1997 were found to be either underfunded or late in their submission, requiring remedial action.
Plunkett says: We cannot operate a system with any kind of discrepancies and are not happy to have any funds which don’t meet the standards. There is no loophole for funds either, and they will be pursued until a satisfactory proposal has been made. Otherwise trustees will be obliged to lower their benefits to meet the regulations.”
Of the infringing funds, 59 were finally brought up to standard by the end of 1997, with 54 still outstanding, an unspecified number of which are now operating DC schemes.
However, Irish pension fund assets leapt to almost Ir£26bn ($37bn) by the end of 1997, a rise of over Ir6bn on the previous year, with average investment returns doubling from 15% to almost 30%.
The results published in the recently released 1997 annual investment survey by the Irish Association of Pension Funds (IAPF), reveals Ireland enjoying a favourable investment background, with strong outperformance by Irish equities relative to other markets.
Overall Irish equity exposure rose from 23.6% of total assets to 26.6% by end 1997, with equity exposure worldwide accounting for 58.5% of total investments, compared with 56.1% in 1996.
Des Crowther of the IAPF said: “Irish funds’ strong performance in equity markets has mirrored the UK experience, but also a lack of exposure in the Far East has ensured Irish funds suffered no adverse effects from the Asian crisis.”
However, fixed income investments have continued to decline, down to 26.5% from 29.6% the previous year.
This downward trend it has been suggested, could be due to the continued outperformance of equities, although such a fall in fixed income has been happening since 1988. Hugh Wheelan”