1. THE PENSIONS BOARD
Funding Issues and Current Trends in Pension Schemes
Jerry Moriarty – Head of Investigations and Compliance
17 September 2004

3. Occupational Pensions
Defined Benefit Schemes
Defined Contribution Schemes
Personal Retirement Savings Accounts – PRSAs

4. Defined Benefit Schemes
Based on a set benefit formula
Employee usually required to contribute a fixed cost - % of Salary
Employer pays the balance
Funding monitored by Pensions Board

5. Why are there funding issues?
Performance of Investment Markets
Low interest rates
We are living longer
Regulation, more protection
Salary increases
Benefit improvements

6. Consequences More flexibility allowed by the Pensions Board
Employers paying more money
Some employees paying more money
Some benefit reductions
Greater awareness
Review of the funding standard

7. Defined Contribution Employer and employees pay fixed amounts
Benefit depends on funds available at retirement
Employees generally have investment choice

8. The Dangers of Defined Contribution
Risk is passed to the employees
Are employees able to make the right investment choices
Administration is complicated
Are the contributions being paid adequate

9. PRSAs Employer must offer access to “excluded employees”
Employer is not obliged to contribute
Standard PRSAs have maximum charges

10. Trends New schemes are defined contribution
Defined benefit schemes surviving but under pressure
PRSAs not intended to replace either
There are other possibilities for scheme design

11. The Future Target to increase coverage to 70% of the workforce
52.4% of total workforce at Q1 in 2004
59.2% of workforce over age 30
Review of coverage in 2006
If insufficient progress all options considered including compulsion

12. Questions for you Why do you have a pension scheme?
Is it understood by your employees?
Do you sell it enough?
Is enough being paid?

13. THE PENSIONS BOARD
Jerry Moriarty – Head of Investigations and Compliance