William Fry Spring Breakfast Briefing Series29 April 2009

David MaloneHead of InformationThe Pensions Board

PENSIONS - OVERCOMING THE CHALLENGES IN TODAY’S ECONOMIC

CLIMATE

The Pensions Board focus

Three key operational areas:

– Supervision, regulation and enforcement

– Policy, legal and actuarial

– Information and awareness

Numbers in Irish pensions• Company pension scheme

579,922 members in 1,271 DB schemes

272,197 members in 90,424 DC schemes

• Personal Retirement Savings Accounts (PRSAs)155,632 PRSA contracts in force (88,213 employers had signed up with a PRSA provider )

• Personal pension plans and Retirement Annuity Contracts (RACs) 200,000 plus contracts (Irish Insurance Federation)

• Fund assets approximately €60 - €80 billion • Voluntary regime for supplementary pension provision

(Figures at end December 2008)

Changing World We Live In

– We are living longer– More contract work– More mobility in careers– Changing work patterns– More part-time working– Single parent households

• Smaller families

• Separation/divorce

Changing Demographics

2006 2026 2056

No’s at work 2,000,100 2,268,000 2,125,000

Aged over 65 464,000 844,000 1,532,000

No’s at work per person over 65

4.3 2.7 1.4

Why Have a Pension?Where will your income come from when you retire?

The current State social welfare pension is €230.30 per week

(or € 11,975.60 per year)

…….will this be enough to meet all your needs in retirement?

Almost 80% of the Pensions Board consumer research sample said that the State old age pension would NOT meet their needs in retirement

Pension Adequacy

• Pension expectations

• Investment losses

• Investment risk

• Risk management

DC Schemes

Scheme members should be provided with:

– adequate and understandable explanations of investment choices and risks

– schemes should provide lower risk investment choices to members as they approach retirement

– schemes should have well-designed default investment options for all members

– scheme members themselves should also take an active role in their pensions

DC Schemes Issues

– Compulsory annuity purchase– Annuity purchase deferral– Statement of Reasonable Projection – Long term DC strategy (relax compulsory

annuity purchase requirements?)– Pensions Board guidance

DB Scheme FundingCurrent difficulties

– over-reliance on outperformance of equities over other investments

Actions taken

– relief measures - extension to recovery periods– Government Pensions Framework– Pensions Board guidance

Pensions Information

www.pensionsboard.ie

Information ServicesWebsite

Guidance & FAQsE-mail alerts

Enquiry serviceTrustee supports

Regulation and Compliance

• Risk based assessment

• Misappropriation of scheme assets

• Registered Administrators (RAs)

• Board prosecutions and on-the-spot fines

Thank You