IRELAND - Heissmann Consultants has called for law in Ireland to protect the 250,000 people who are members of defined contribution (DC) schemes.
Speaking at the IAPF’s annual investment conference in Dublin this week, Derek McNamee, managing director of Heissmann, said it was surprising that an estimate of the projected pension was not currently required under legislation in DC annual statements.
“Many annual statements are of limited value as they only state the contributions paid and current value, not the projected pension on retirement which is what matters,” he said.
“As a result, consumers are not aware that they may need to significantly increase their contributions to ensure an adequate pension.”
McNamee said it was ironic that PRSA statements by law include projected figures but DC schemes do not.
“Most people assume that if they and their employer are contributing to a defined contribution scheme that they are secure but the reality is that the majority of DC schemes in Ireland are underfunded and most members are not aware of this.”
In addition, McNamee criticised the heavy focus on a 70% national target for pensions coverage: “The current demographics of the Irish market are such that there are many people at a young age and mobility who will not be interested in pensions contributions no matter what incentives are offered,” he said.
“A more meaningful target would be expressed as a percentage of the working population over say age 30 who have been in their current jobs for at least 12 months. A big issue we need to address is not just the extent of pensions coverage but the quality and adequacy of the pensions which do exist.”
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