Are we witnessing the death of final salary pensions?
The events of the past week demonstrated conclusively that the traditional defined benefit or final salary pension scheme is now in its death throes.
On Monday, Aer Lingus was in the High Court seeking to reduce its share capital by €500m -- a move that would allow it to pay regular dividends. However, in a clear shot across the company's bows, Mr Justice Peter Kelly expressed his concern at the €700m deficit in the pension fund it shares with the Dublin Airport Authority.
Four days later, AIB announced that it intends to close its defined benefit pension scheme; while INM, the publishers of this newspaper, wrote to its employees warning them that it, too, was considering closing its defined benefit pension scheme, which has a deficit of €148m.
These latest moves come just over a week after the Pensions Board announced tough new regulations forcing firms with pension fund deficits to clear them more quickly. While the main problems facing defined benefit schemes are increased longevity and poor investment returns, has over-zealous regulation made a bad situation even worse?
Sunday Indo Business