The Irish Association of Pension Funds has claimed that Irish pension investors lack understanding in investment and risk concepts which, in turn, may affect pension schemes by restricting investors' ability to manage their assets in the most appropriate manner.
The pension schemes are designed to involve member communication but, according to the report, are failing to get defined contribution (DC) scheme members to actively involve themselves in the investment of their pension funds.
Members of DC schemes have the power to set their own investment strategy in line with their particular circumstances. However, our study finds that many DC members do not feel confident to make such decisions or are not interested enough to do so, commented Joe Byrne, chairman of the Irish Association of Pension Funds (IAPF).
The general lack of understanding of investment issues includes some trustees of DB schemes who appear reluctant to get involved with more complex, modern investment strategies, such as investing in alternative assets, added Helen Keelan of the IAPF Investment Committee that commissioned the report. Such alternatives could benefit their schemes by helping to maintain overall returns of their pension fund whilst at the same time improving their level of risk diversification.
The study also showed a growing trend to invest in Europe, although Irish pension funds are still continuing to invest in property.
IAPF chairman Joe Byrne commented: Given the ongoing public debate surrounding the so-called pensions crisis and the poor level of private pension provision, improving the level of interest in, and understanding of investment issues among the wider population is an area that should be proactively addressed by employers, the pensions industry and the state.