Almost one in four final salary pension schemes close in 2012

Almost one in four defined benefit pension schemes will close this year, the Irish Association of Pension Funds says.

Speaking as the pension fund industry group holds its annual conference, IAPF chairwoman Rachael Ingle said only eight per cent of such pensions, also known as final salary schemes, are likely to remain open to new members by the end of the year, making such pensions a public sector only luxury.

At the start of the year, there were just under 1,000 such schemes operating. That figure is now down to 820, and Ms Ingle said it was likely to be around 750 by year end.

Alarming pace
Jerry Moriarty, chief executive at the IAPF, said: "The survey of pension trustees mirrored the numbers emanating from the Pensions Board with full scheme wind-ups growing at an alarming pace; 10 per cent of funds having wound up the entire scheme – as against closing schemes to future benefits – with a further 14 per cent planning to do so in the next 12 months."

The industry group also voiced ongoing concerns about the Government’s failure to address the priority order which, it says, disproportionately favours retired scheme members over those yet to retire.

Commenting on the upcoming Budget, Ms Ingle said: “Huge sums have already been extracted from pension savers through the pension levy and this is clearly impacting their ability to survive; it is time to stop regarding people’s retirement savings as a source of short-term tax revenue when it’s far more important to ensure we encourage people to save for the future in order to prevent a bigger crisis down the line.

Secure, fair and simple
"We need to ensure we can have a pension system in Ireland that is secure, fair and simple."

Her comments came as a row developed over the failure of the Government to spend all of the €1.9 billion proceeds from the pension levy on job creation, as originally intended. Opposition figures said somewhere between €200 million and €300 million had yet to be spent and urged the Government to explain why this was the case.

Separately, PricewaterthouseCoopers (PwC) has called for clarity in the Budget on the proposed funding limit for pensions. It cited a survey it carried out which showed that almost six in 10 people who would be affected by the measure were not even aware of the impending restriction.

The proposed restriction – which would allow tax relief only on pensions delivering retirement income of up to €60,000 – will potentially affect more than 30,000 pension savers, PwC pensions and human resources partner Alan Bigley said.