Closing Defined Benefit Pension Schemes – A Bitter Pill?

Defined benefit pension provision in Ireland

In a Defined Benefit, or DB, scheme, the employer bears the financial risk of the plan. If the amount contributed to the scheme is insufficient to discharge the liability, the employer must pay the balance. As people are now living for much longer, employers face significant increases in funding these plans. This, in turn, has led to companies such as Pfizer making strategic decisions to move away from DB pension provision. The move towards Defined Contribution, or DC, pension provision will reduce risk and uncertainty for employers but it also results in employees taking on the risk that they will have an adequate pension in retirement.