Saturday 7 December 2019

Deficits in the State's largest pension schemes halved to €1.1bn last year

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Charlie Weston

Charlie Weston

The deficits in the State's largest private pension schemes fell dramatically last year.

They dropped by 50pc to €1.1bn, helped by surging stock markets, according to a new analysis by Lane Clark and Peacock Ireland Limited (LCP).

The study looks at defined benefit pension schemes in Ireland's largest publicly quoted and State-controlled companies. These are traditional schemes where there is a guaranteed pension amount based on years of service and final salary.

However, there was a sharp rise in the deficits in the first nine months of this year, highlighting volatility in the stock markets.

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Over the past 10 years, there has been a marked improvement in funding levels in the pension schemes of the biggest companies and State bodies.

This is considered a more significant measure as pensions are a long-term product.

The largest deficit last year in a State-controlled body was in the CIÉ group of companies, at €547m. The Central Bank, which is tasked with regulating the financial industry, has the second largest deficit among the State-controlled bodies at €364m, according to the LCP study.

A rise of €57m in the deficit for the Central Bank scheme was recorded between 2017 and last year.

Ervia, which is the semi-state body that includes Irish Water and Gas Networks Ireland, has a deficit of €98m. This is down from €128m in 2017.

For all the schemes analysed, it was found that the total assets amount to €28.2bn, with total liabilities of €29.3bn. The difference between the two was €1.1bn last year.

The liabilities are largely represented by the pension payments that have to be made to members.

However, the analysis also points to an almost 300pc rise in deficits over the first three quarters of 2019.

This saw the pension scheme deficits in the companies analysed rising to an estimated €3bn in September this year.

LCP said this highlights the risks and volatility remaining in the funding positions of Irish pension schemes.

The highest deficit in private schemes, or so-called funded schemes, was in Smurfit Kappa at €315m.

Bank of Ireland saw its deficit fall in half to €228m last year. Sandwich maker Greencore had a deficit of €100m last year.

Partner in LCP Conor Daly said despite long-term gradual positive trends, volatility and risk are having significant short-term dramatic effects.

Irish Independent

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