DC SHIFT BRINGS UNCERTAINTY FOR RETIREES

Most occupational schemes in Ireland are now Defined Contribution. Just over 500 Defined Benefit plans remain in operation, of which around twothirds remain open to accrual of benefits. The average annual rate of shift from DB to DC has been around 4% since 2014, according to Pensions Authority data, and this trend is expected to continue.

Dr David Knox, senior partner at

Mercer, observes that the shift to defined DC increases uncertainty for retirees, as individuals bear the risks and opportunities before and after retirement within DC plans.

“It is essential that individuals make the best financial decisions at retirement to maximise the value of their available DC pension assets,” Knox advises. “Just as diversification is a key part to any investment scheme, individuals may also seek to diversify their retirement savings between regular income, appropriate protection and access to capital, as well as different sources of financial support.

“Households will have to consider what the right balance is between receiving a steady income, access to some capital and protection from future risks, given the many uncertainties faced by retirees,” says Knox.