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Pension scheme assets recover from last year’s blip

Assets are growing faster than liabilities and scheme membership is showing healthy improvement, according to Central Bank data

Although defined-benefit schemes – where the pension is determined by length of service and salary – are rapidly disappearing outside the public sector, they still account for a slight majority of scheme liabilities.
Although defined-benefit schemes – where the pension is determined by length of service and salary – are rapidly disappearing outside the public sector, they still account for a slight majority of scheme liabilities.
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Cantillon
Tue Jun 20 2023 - 05:00

Pension funds have bounced back from a miserable 2022 but they have some way to go before they recover all the ground lost in a tumultuous year.

Data from the Central Bank of Ireland shows that the total assets of the Irish pension fund sector jumped by 9 per cent – or €10.6 billion – in the first three months of 2023. That brings funds’ total assets to €128 billion, well above the €117 billion at which they were languishing in the second half of last year. However, it still leaves them almost 7 per cent shy of the €137 billion recorded in the final quarter of 2021.

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In fact, pension fund assets are now effectively back at the levels they were at the end of 2020.

Still, the increase in assets is the largest in one quarter since the Central Bank started collating the data back in 2019.

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Liabilities are also rising but more slowly – up more than 8 per cent last year. At €120 billion, they remain lower than at any time before 2022. Although defined-benefit schemes – where the pension is determined by length of service and salary – are rapidly disappearing outside the public sector, they still account for a slight majority of scheme liabilities.

Other good news comes in figures that show a notable increase in the number of people in pension funds. According to data supplied to the regulator, 1.56 million people were members of an occupational pension scheme at the end of 2022. That is up 9.8 per cent on the previous year and almost 14 per cent since 2019.

The largest number of these – just under half – are deferred members who have pension entitlements but are no longer with the scheme sponsor. Just 6.7 per cent are either retired or are otherwise beneficiaries under survivor pensions.

Just under half of the assets are accounted for by technical reserves – the amount funds hold in order to meet the future claims of its members. Falling technical reserves in defined-benefit schemes brought that part of the pensions industry into surplus for the first time since funds started reporting the figures four years ago.

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