Pensions Board urges calm in markets turmoil

People should not use stock-market turmoil as an excuse for holding off on retirement provision, the chief executive of the Pensions Board, Ms Anne Maher, said yesterday.

Before the presentation of the Pensions Board annual report, Ms Maher acknowledged that market volatility "has obvious consequences for pension scheme members and employers operating pension schemes" but said equities still offered an attractive investment option over the long term.

"Equity markets have served pension schemes well overall. We'd hope that they would continue to do so," she said, adding that equities gave a higher return because of the higher risk they entailed. "There are no free lunches," she said.

Anxieties over corporate accounting have created "a serious need to restore public confidence" with regard to equity-based pension schemes, according to Ms Maher.

"We'd hope that the report would show that pension funds in Ireland are generally well-run and well-regulated," she said.

In general, Ms Maher said the Pensions Board remained concerned about the extent of pensions coverage in the Republic, particularly since the increase in pension-scheme membership "does not appear to be keeping pace with the substantially increased Irish workforce".

The board is finalising procedures for the approval of Personal Retirement Savings Accounts (PRSAs) - considered to be key in promoting pensions coverage - and has conducted discussions with more than 10 potential providers.

A Simplification Working Party aimed at addressing unnecessary complications that may be contained within the PRSA framework has also been convened. Particular attention within that group will focus on provisions that do not aid choice or consumer protection, according to Ms Maher. PRSAs are due to be introduced to the public at the start of next year.

Introducing the Pensions Board's annual report, the Minister for Social, Community and Family Affairs, Ms Coughlan, drew attention to the increased percentage of pension-scheme membership covered by defined-contribution pensions rather than defined-benefit schemes.

While defined-contribution schemes - where the employee bears the risk - are worthwhile, consumers should be careful that they are sufficiently funded to provide adequately for retirement, Ms Coughlan warned.

"A small pot of money will only by definition buy a small pension," she said.

The annual report shows the Pensions Board dealt with 4,411 inquiries last year and began 75 investigations into issues concerning occupational pensions.