Anglo one of few firms with enough funds to pay all staff full pensions
Published 11/11/2010 | 05:00
IT was the one company that took more risks than any other by making huge bets on property and equities.
Some international observers have gone so far as to suggest that the spectacular collapse of Anglo Irish Bank may even pull down the Irish economy.
However, when it comes to the pension fund of the beleaguered bank, few risks were taken. The staff pension fund at Anglo Irish Bank is one of the few to be fully funded.
Even though eight out of 10 company pension schemes are in deficit, the Anglo Irish fund has enough money to pay out full pensions to all its staff.
Former Anglo boss Sean FitzPatrick took a €6.8m pension pot from the scheme.
Former chief executive David Drumm has a €3.7m share, according to US filings.
Anglo will cost the taxpayer up to €34bn to rescue.
The healthy state of the Anglo pension fund is in contrast with the situation at the State's largest private companies, which have seen their pension fund deficits double since the start of this year to a staggering €16bn, a study by pensions experts Lane Clark and Peacock (LCP) Ireland found.
Combined deficits of this size placed a huge question mark over the future of traditional defined benefit pension schemes, pensions experts said.
There is a €2.2bn hole in the pension fund of semi-state ESB, with a €1.6bn deficit in the Bank of Ireland retirement scheme.
Paper and packaging group Smurfit Kappa is short €650m in its fund.
Most pension funds have encountered problems because they remain over-invested in equities.
However, in contrast to other pension funds, the Anglo Irish Bank pension trustees had been cautious, putting most of their money into high-quality bonds, LCP said.
Anglo has the lowest proportion of investments of any of 33 of the largest companies in the State, with just one-third of its funds in shares.
LCP partner Conor Daly said: "The pension fund is a rare example of prudent risk management by Anglo Irish Bank. The pension fund trustees took a different view on risks than was taken in the operation of the business."
Anglo Irish Bank's pension fund is in the strongest position of the 45 largest Irish-owned companies studied by LCP.
It had funds of €98m at the end of last year, with liabilities of €92m, according to its annual accounts.
This means it has more than €6m to spare to meet the needs of its pensioners and the future pensions of its current staff.
Strong funding levels were also recorded for the National Treasury Management Agency, RTE and drugs distributor United Drug.
However, most big Irish-owned companies have large deficits.
The sharp rise in the deficits reflects falls in the yields, or interest paid, on high-quality bonds such as German and French bonds and the corporate bonds of large European companies.