Call for end to defined benefit schemes
THERE have been calls by the Irish Brokers Association (IBA) for all defined benefit pension schemes to be wound up as they cannot hope to keep the promises that have made to members.
Ciaran Phelan of the IBA said the majority of defined benefit schemes are so heavily in deficit that the younger members will get nothing from them.
Mr Phelan said: "Younger employees are likely to fare badly in defined benefit pensions as older members bankrupt the fund."
He added that defined benefit, or traditional company schemes, were from a different era and "should for the benefit of all be wound up".
Another factor is improving life expectancy, which means pensions are paid for longer and thus cost more.
But Mr Phelan said it has been suggested that this could be countered by increasing the retirement age, something which already has been done in a number of other countries.
"However, unless it is moved to 85 it will have minimal impact on the real crisis," Mr Phelan warned.
More than half of all workers who are in a pension in the private sector are now in a defined contribution scheme, new research indicates.