Defined benefit pension schemes may have enough time to recover losses before many people begin drawing on them, Minister for Social and Family Affairs, Mary Hanafin, said today.
Speaking at the launch of the Office of the Pensions Ombudsman’s Annual Report and Digest of Cases for 2007 today, Ms Hanafin said Ireland's defined contribution system is "relatively immature", giving the schemes time to recover.
"However, there are some people retiring now or who are close to retirement, whose funds have suffered badly in the past year. Enabling people to defer purchase of an annuity for a period of time is an option that might assist some and this option is currently being examined within the Department of Finance,” she said.
Ms Hanafin said the one lesson that could be taken from the current difficulties was to take a more conservative approach to pension investment, particularly for older workers, and called on pension fund managers and financial advisors to reconsider their investment strategies.
The Pensions Ombudsman annual report highlighted a small number of complaints, mainly as a result of misunderstandings and a lack of clarity in documentation.
However, it also revealed problems with construction industry pension schemes, and the Minister said that while there are particular difficulties in the industry, there is "no excuse" for the employers withholding deductions made from employees for pensions schemes.
"This not alone affects pensions, but also impacts on the payments of benefits to widows and children on the death of a worker, an occurrence which is a high risk in the industry. Withholding of contributions cannot be tolerated,” she said.
Ms Hanafin also echoed a call from the Pensions Ombudsman for providers improve and simplify their documentation and promote a better understanding of schemes among their membership.