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Tuesday, 16th April 2024
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Irish pension providers need to focus on risk management Back  
Risk management was a core theme of the recent IAPF ‘European Pensions and Investing Summit’.
Irish pension providers need to understand risk management better, according to a recent conference in Dublin. The conference, ‘European Pensions and Investing Summit’ held in Dublin by the IAPF, found that risk strategies need to be examined to ensure that Irish pension providers are accounting as accurately as possibly for market volatility and market shifts.The conference went onto conclude that absolute risk needs to be measured and customised benchmarks must be developed to incorporate the specifics relevant to Irish pensions, for example the expected return of equity indices.

Tom Finlay, chairman of the IAPF, said that the conference underlined the importance of global issues but also of scale. The main objective of the conference was to expose the members of the IAPF to best practice globally. The size of Ireland’s pension fund industry (E50 billion approximately) is equivalent to one large US state pension and therefore Irish pension providers must be aware of the level of specialisation needed. Most Irish pension funds are in the region of E3-5 million and there would only be a handful over the E1 billion mark. Finaly said it is important for Irish pension providers and trustees to be aware of global trends but they must put this information in context for their market size.

The pace of change within the European pensions market was also high on the summit’s agenda. The conference heard that the progress of European pensions moving to funded schemes is relatively slow. Ireland, UK and the Netherlands share the same thought process when it comes to pension provision. Germany is moving towards a similar set up whereas France is against many of the proposals. Europe must address this difference in thinking to ensure that a pan-European pensions market becomes a reality.

On the investment side, the Irish have good experience in international equities, with a typical pension fund investing about seventy per cent in equities overall and about fifty percent of this into overseas companies. This compares significantly with UK or US investment managers who would hold more of their funds in domestic stock.

The intensive two-day conference gave the Irish pensions industry a flavour of what their fellow international pension providers are doing. Organised by the IAPF in conjunction with Information Management Network, the first international pensions conference took place in Ireland on the 18-19th April. Over 300 delegates from Ireland, UK, Europe and America attended the two-day event. There were over fifty international speakers, presenting papers on topics ranging from European pension reform, asset allocation, re-engineering group pensions management, reconsidering fixed income, risk management and global transition management.

There was also a return of the IAPF Forum, which has not been held in five years, where three main areas where under discussion, flexible benefits, investment policy and governance.

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