Irish pension contributions not enough - Mercer
IRELAND – “Pension contributions in Ireland are inadequate,” according to Mercer Human Resource Consulting.
At its annual retirement conference in Dublin this week, Mercer highlighted the problems facing the Irish pensions market.
According to Mercer, the average contribution rate to defined contribution schemes in Ireland is currently around 10% of salary, when they should be 20% upwards if a suitable retirement is to be provided. “If contribution levels do not improve, the burden on the economy and public services in years to come could be significant.”
Mercer criticised employers for “closing DB schemes without considering all the options.” According to Mercer, there has been a 30% reduction in the number of defined benefit schemes operating in the last ten years.
Said Paul Webb, senior consultant at Mercer: “We would encourage all organisations to review existing schemes and to examine what actions can be taken within the current scheme, before any dramatic decisions are made. Rather than automatically opting for the DC solution over the DB solution, we are finding that the answer for many organisations is somewhere in the middle.”
Webb suggests employers and employees should share the responsibility. “If employers and employees accept shared responsibility for retirement planning in line with the needs of the individual organisations and the employees affected – the resulting solutions can be workable for both.
Roz Briggs, senior consultant, urged companies not to “stick their head in the sand”. “Companies need to be proactive on the pensions issue. There are real workable solutions available to companies if they wish to avail to them,” she said.
Earlier this month the Pensions Board said the total assets in Ireland’s new personal Retirement Savings Accounts were 5.25 million euros at the end of September.