Monday 23 April 2018

Value of pensions jumps by a massive €16bn

Charlie Weston

Charlie Weston

THE value of savings in private pensions surged by €16bn last year, according to the Irish Association of Pension Funds.

This is despite the Government levy that is set to extract €2.5bn from pensions.

Pension savers now have a combined €108bn to provide themselves with an income when they retire.

A combination of increased contributions and good investment market returns saw pension savings grow by 18pc.

But the chief executive of the Irish Association of Pension Funds, Jerry Moriarty, warned that even though funds have risen in value, the liabilities facing pension savers are rising at a faster pace.

This means that "people will either have to live on less, retire later or increase their savings", he said.

Launching the IAPF's annual survey, Mr Moriarty said savings were now up by 70pc since diving to a low of €63.6bn at the end of 2008, when the financial crisis struck.

"The annual IAPF investment survey has shown some positive signals, with pension savings in Ireland at the highest level recorded," Mr Moriarty said.

"While there are many issues that need to be addressed to ensure that more people can enjoy retirement, we often lose sight of the fact that we have a well-developed pensions system in Ireland with a substantial amount of savings."

However, Mr Moriarty sounded a warning note regarding the liabilities of these pension funds.

Liabilities - which are a reflection of the costs of meeting pension payments - have been rising at a much faster pace due to historically low interest rates, particularly on Government bonds.

This means the "liability" - or the pension a member can expect to get at retirement - has decreased in value over the past few years as bonds yields have fallen.

The upswing in the value of pension funds is despite the four-year levy imposed on the value of funds, which is set to generate around €2.5bn for the Exchequer.

Irish Independent

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