IRELAND - Defined contribution (DC) pension schemes saw membership rise by 87% in nine years but have been unfairly tagged as inferior, according to the Irish Association of Pension Funds (IAPF).
Speaking at the organisation's DC conference today, Jerry Moriarty, director of policy, IAPF, said: "It is not the framework that makes the difference rather the contribution levels being paid. There is no such thing as a pensions 'free lunch'.
"The contributions will always drive the benefits," he added.
Dr Leonie Bell, managing consultant, Oxera, continued: "Research suggests that criticisms of DC schemes are often unfounded, as the risks associated with them are overstated while their advantages are downplayed."
As the National Pensions Reserve Fund (NPRF) reported a negative return of -10.5% for Q1 2008, conference attendees were also urged to not be alarmed at recent falls in pension value as a result of the economic crisis.
Bell said: "While we cannot predict the future, over 100 years of research finds that over a long investment horizon equities provide a significantly higher average return for a very small probability of being worse off compared to other, 'safer', investments."
Moriarty concluded: "Employees in particular need to take more responsibility in ensuring that they are making sufficient savings for the type of retirement they want.
"It is especially important that in the current economic environment that pension saving is not viewed as a luxury that can be cut back. When we all get to retirement it will be an absolute necessity."
The NPRF, which was established in 2001 to provide retirement income for public service and general social welfare funds, retained a 4.2% annualised return from its inception date.
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Self-administered pension funds spent £15bn on payments to pensioners in Q4 2018, but received just £12bn in contributions (net of refunds), Office for National Statistics (ONS) data reveals.
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