The year 2007 was a turbulent year for pensions. The decline in the numbers of defined benefit schemes has continued and the chaotic state of the investment markets has been a great worry to all pension scheme members, but especially those whose benefits are calculated on a defined contribution basis.
There have been some interesting developments, particularly in the shape of the new “hybrid” pension arrangements. These come in many different shapes, but all are designed in one way and another to ensure that the risk involved in pension provision is shared by employer and employee, rather than falling completely on the employer, as is the case with most defined benefit schemes, or on the employee, as in standard defined contribution arrangements. Some of these schemes have the great merit of offering a full defined benefit package to the lowest paid while at the same time protecting the employer from the full effects of large salary increases for the highest paid.
2007 also saw the start of the discussion on the much needed reform of the pensions system, triggered by the launch of the Green Paper on Pensions in the Autumn. Changes that are made as a result of this consultation process will have long lasting effects. It is therefore essential that the decisions now to be made are the right ones for this country and its workers. We have been fortunate in the distribution of our population which means that the aging of our workforce and the increased dependency ratios that this implies will happen later in Ireland than in the neighbouring countries of Europe. It is my intention to make a detailed Submission on the Green Paper on Pensions in 2008.
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