According to the Minister for Social Protection, Éamon Ó Cuív, the Government has agreed to advance the proposal to move to a “new” Defined Benefit (DB) model as outlined in the National Pensions Framework.

The National Pensions Framework, agreed by Government in March 2010, maintains that the current design for funded DB schemes has proven to be too inflexible to deal with recent investment losses and with increasing life expectancy. It offers an outline for re-structured DB schemes, which would involve fixed contribution rates for members and employers, flexible benefits (in the event of investment losses or other adverse experience) and increases in life expectancy accommodated in benefit design.

Speaking at the Annual Benefits Conference of the Irish Association of Pension Funds (“IAPF”) last month, Minister Ó Cuív said “following the decision to expedite its work on this new defined benefit model, my Department will aim to introduce it, following legislative changes, on 1 July 2011.” “Full consultation will, of course, take place with the pensions industry, employers, trades’ unions and other stakeholders in developing the new model.” Doubtless clarifications will emerge in due course which will clarify the practical differences between the “New” Defined Benefit model and the traditional, Defined Contribution model.