Around 237,000 Irish people with defined contribution pension schemes are sitting on a potential time bomb, the Irish Association of Pension Funds (IAPF) warned today.
The IAPF's Mr Raymond McKenna told a conference today that the average defined contribution pensions member needs to "significantly" increase contributions in order to secure an adequate income in retirement.
The majority of pension schemes in Ireland are defined benefit which guarantee a percentage of final salary as a retirement income. However, defined contribution schemes have no such guarantees.
Mr McKenna highlighted that IAPF figures showed the average contribution by employees and employers to a defined contribution scheme was about 10 per cent of income.
"IAPF research finds that this should be more like 15 per cent to 25 per cent of income depending on age and individual circumstances," he said.
Mr McKenna said: "Even if they get the contribution levels right they have got to be aware of the risk caused by inappropriate investment strategy, volatile equity markets and a low interest rate environment".