IRELAND – Almost a third of defined benefit pension funds in Ireland failed to meet the funding standard in 2005, the Pensions Board regulator said.
The news comes as the board is planning to review of the standard.
“At end 2005, the number of active schemes which failed to meet the funding standard was reduced to 32% of the total,” the Board said in its new 2005 annual report.
But it said that approximately half of the 32% expect to get back to full funding within 3 1/2 years. The Board added that “there are still many defined benefit schemes open to new entrants and that the number of total closures has been very small”.
“The positive investment returns experienced during 2005 have helped the position but this was partly offset by further falls in interest rates resulting in increased liabilities.”
“Issues of particular concern in 2005 were the continuing funding difficulties for defined benefit schemes and the disappointing progress on increasing pensions coverage and adequacy,” said chief executive Anne Maher.
“On the positive side, there is increased pensions awareness at all levels and the National Pensions Review completed during the year provides a good input to further policy discussions on pension provision.”
Priorities in 2006 will include the implementation of the pension supervision review and a report on a mandatory system appropriate for Ireland.
“The Board has also agreed to a further review of the funding standard for defined benefit pension schemes,” Maher says.
She added that the Board is concerned about the standard of pension administration.
“This is an area where we plan to increase our focus. We are currently reviewing our method of pension supervision to increase its effectiveness.” The proposed approach will be “more proactive and risk-based”.