Companies are increasingly offering inferior pension schemes to employees, research published today shows.
The study carried out for the Irish Association of Pension Funds (IAPF) found that the number of firms offering a defined benefit scheme has fallen from 67 per cent in 2002 to 37 per cent today.
A defined benefit scheme guarantees the amount of income an employee receives on retirement, while in a defined contribution scheme the amount of money paid in is set but the the amount of income received on retirement is not.
The report, which was done for the IAPF by UCD Michael Smurfit School of Business, finds that 39 per cent of firms that provide defined benefit schemes have closed their schemes to new members. This is up from 12 per cent five years ago.
The number of firms offering defined-contribution-only schemes had tripled from 8 per cent to 24 per cent. About 50 per cent of pensions holders in the private sector were now members of defined contribution schemes, the study found.
The UCD report also found that 70 per cent of employers now contributed more than 5 per cent to defined contribution schemes compared to 46 per cent of firms in 2002.
"The findings emphasise that the responsibility and risk of securing an adequate income in retirement is increasingly moving to employees," IAPF chairman Patrick Burke said.
"But our study suggests that many are not fully aware of the extent of this major change in the pensions' landscape or, at an individual level, of its implications for them personally."
He said that because of the growth in the number of defined contribution schemes "a major challenge moving forward will be to ensure pensions adequacy not just coverage."
He added that the report found a concern among many companies providing pensions that employees were not taking sufficient interest in their scheme.
The study was presented at the opening of the IAPF annual conference, which was opened by Minister for Social and Family Affairs Martin Cullen this morning.
He is due to publish the Government Green Paper on Pensions Policy in the coming weeks.
