(October 1, 2013) – Defined benefit (DB) pension funds are becoming a rare breed in Ireland, with around a quarter expected to have closed in the next year.
The Irish Association of Pension Funds (IAPF) has estimated that 10% have already closed entirely, with a further 14% planning to shut in the next 12 months.
In addition, just 8% of Ireland’s DB funds are open to new members.
Ireland’s pensions industry is going through a period of immense change: not only is there the beginnings of a widespread shift to the market becoming defined contribution dominated, but the government has continually tinkered with pension savers in an effort to get the nation’s economy back on its feet.
The latest proposal put forward by the government would allow tax relief only on pensions delivering retirement income of up to €60,000, potentially affecting more than 30,000 pension savers, according to PricewaterhouseCoopers.
IAPF Chairwoman Rachel Ingle told the Irish Times: “We need to ensure we can have a pension system in Ireland that is secure, fair and simple. Huge sums have already been extracted from pension savers through the pension levy and this is clearly impacting their ability to survive.”
The pension levy was introduced in May 2011 to finance job creation and pay for tax cuts to keep Irish businesses going. Around €1.9 billion has been raised so far.
Ingle continued: “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.”
The Irish Budget for 2014, when any changes to the pension levy and tax relief changes will be announced, is to be delivered on 15 October, 2013.
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