Largest DB pen­sion plans still prone to risk

The Irish Times - Business - - BUSINESS / NEWS - DO­MINIC COYLE

Ire­land’s largest de­fined-ben­e­fit pen­sion plans man­aged to wipe out their deficits early this year, only to see them reemerge as mar­kets took a tum­ble in the past two months, ac­cord­ing to a new study.

The 10th LCP sur­vey cov­ers the 15 largest Ir­ish-listed busi­nesses that have fi­nal salary, or de­fined-ben­e­fit, and 11 ma­jor semi-State en­ter­prises.

It shows that deficits in their pen­sion scheme fell by 40 per cent or €1.4 bil­lion in 2017, to €2.2 bil­lion.

“This re­port con­firms many pos­i­tive trends,” ac­cord­ing to Conor Daly, part­ner at LCP Ire­land.

“We be­lieve that, for the first time since com­menc­ing this anal­y­sis in 2008, the ag­gre­gate pen­sion deficit for the Ir­ish-funded schemes of the com­pa­nies an­a­lysed was fully elim­i­nated in Septem­ber 2018,” he said.

“How­ever, their pro­gres­sion back into deficit since Septem­ber points to con­tin­u­ing volatil­ity and risk.”

Trustees

LCP says a ma­jor fac­tor in the im­proved state of the schemes was strong in­vest­ment per­for­mance and the im­pact of mea­sures by scheme trustees to man­age li­a­bil­i­ties.

“In the first nine years of this re­port – from 2008 to 2016 – the av­er­age fund­ing level rose by only four per­cent­age points from their post-crash po­si­tions of 81 per cent in 2008 to 85 per cent in 2016,” Mr Daly said.

This year, the schemes sur­veyed showed an av­er­age fund­ing level of 91 per cent – “a larger in­crease in one sin­gle year than the cu­mu­la­tive pre­vi­ous nine years of our anal­y­sis”.

The amount of the pen­sion deficit at CIÉ; the high­est among State com­pa­nies

Of the com­pa­nies an­a­lysed in this sur­vey, four – AIB, Kingspan, UDG Health­care and Ir­ish Con­ti­nen­tal Group – had suf­fi­cient assets to meet their li­a­bil­i­ties. That’s an im­prove­ment on last year, when only AIB and Kingspan man­aged to do so.

UDG at 116 per cent is the strong­est-funded while the Cen­tral Bank (69 per cent) and CIÉ (73 per cent) are worst-off.

The high­est deficit among the State com­pa­nies was CIÉ at €784 mil­lion. Among the pub­licly quoted com­pa­nies, Bank of Ire­land’s pen­sion hole of €478 mil­lion is the largest.

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