It has been a busy but enjoyable five years for Mr Eamonn Heffernan. But if he didn't step down as non-executive chairman of the Pensions Board next Wednesday, he could find himself in an uncomfortable self-regulatory role in coming months.
It is because of his connection with the Society of Actuaries in Ireland, of which he is vice-president, that he is stepping down from the Pensions Board. Next May he will be taking on the presidency of the society and, he believes, there would be potential for conflict if he stayed in both roles.
Ultimately, the board is the regulator for pension funds. Mr Heffernan gives the example that it regulates the funds by monitoring for compliance with minimum funding standards. However, actuaries sign the certificates that verify that the pension schemes are in order. Because the actuaries have a key involvement with minimum funding standards, he explains that "the board would be in discussion at any particular point in time with the Society of Actuaries on guidance, for example, that it might give to its members and issues such as that".
He has been on the board for 10 years - for the first five as a member and as chairman for the remainder. "Having been a member of the board for the previous five years, I felt it was time. I was appointed by the minister so I indicated to the minister that I wouldn't be available to serve again."
An actuarial consultant by profession, Mr Heffernan continued to work in Mercer in an executive position while being the non-executive chairman of the board. Within Mercer he is an actuarial consultant, advising the private and public sector on providing for pensions. He also deals with professional affairs, innovation, knowledge management and is an actuary to a number of pension funds at a personal level.
Mr Heffernan can safely cast his eye over the past five years and agree that his term as chairman has been successful. The board only came into existence 10 years ago, when, he explains, "it started from a greenfield situation". There was a lot of focus in the initial five years on putting together structures, regulations and processes to implement the Pensions Act, passed in 1990. The other main function of the board is to give policy advice to Government. According to Mr Heffernan, there was probably a change in emphasis over the past five years, from setting up structures to giving policy advice to Government and continuing to monitor compliance with the Pensions Act.
Because pensions schemes operate in a voluntary environment, a reasonable balance had to be kept. "The risk of over-regulation would be that employers would decide `you've gone too far and we won't provide pensions for our employees'. So there is this delicate balance between protecting members' interests and over-regulating."
Policy was also important and, in May 1998, the National Pensions Policy Initiative was completed and presented to Government, recommending a blueprint for pensions over the coming decades. "Perhaps uniquely of such reports to Government, the report was very much welcomed by Government and a number of its principal recommendations, have in fact, at this stage been implemented or are well on the way to being implemented."
One of its core recommendations was that social welfare pensions would be increased to 34 per cent of national average industrial earnings over a five to 10-year period. The Government is well on its way to implementing that recommendation - the social welfare pensions increases announced in Budget 2001 are at a level of 32 per cent of industrial earnings.
The success of the Pensions Board and the acceptance of its recommendations, Mr Heffernan believes, is due to the diverse group comprising the board: representatives of the pension industry, social partners and Government. However, the board has been disappointed to see that the percentage of the workforce with pensions coverage has not increased over the past decade. The level is inadequate and needs to be increased, it says. "It's a combination of a number of things: freeing up the system, providing information, educating people and giving them confidence in the system," Mr Heffernan explains.
He has been working in pensions for the best part of 40 years, long enough to have considerable confidence in the system. He's had a pension from his early days in his profession, having joined the Irish Pensions Trust after his Leaving Cert in 1961. "At the time, did I see the need for a pension? I probably didn't and that's understandable. One of the things that I think perhaps needs to be done is, even when people are at school and college, there has to be a greater awareness in the minds of people that pensions are long term.
"In order to provide yourself or be provided with an adequate pension, you've got to start providing at a relatively early age - many, many, many years before you will ever see a pension. That, I think, is one of the great dilemmas: how do you interest people in pensions at an age when the receipt of pensions are so distant?"
Even if young people aren't interested in pre-funding their futures, the National Pensions Policy Initiative has recommended pre-funding by the Government to reduce the risk of, perhaps, social welfare pensions in less well-off times. "There are approximately five people now of working age per one person over 65. By the middle of the next century, that could have changed to two people of working age per one person over 65. The traditional way that, for example, social welfare pensions are financed is on a pay-as-you-go basis - this generation pays for the pensions of the previous generation. We felt that, ultimately, that could represent an intolerable burden to a future generation." The recommendation was accepted.
After 12 years with the Irish Pensions Trust, Mr Heffernan and two colleagues left and set up Pension & Investment Consultants. In 1992, Mercer acquired the company and, in a strange twist of fate, Mr Heffernan is back working with people he first knew in the 1960s as Mercer's parent acquired the Irish Pensions Trust parent in 1998.
As well as his full-time job, Mr Heffernan was also a member of the Commission on Public Service pension, set up in Government in 1996. However, he doesn't find it too difficult to juggle his various responsibilities, although he admits an extra few hours in the day would make it a bit easier. "I've enjoyed what I was doing. I've probably worked long hours and, by and large, there hasn't been a conflict. As a non-executive here, my involvement with the board would perhaps be the equivalent of one day a week, so I've been able to manage the various different responsibilities by working till all hours at night and getting up early in the morning."
Despite his busy 50- to 60hour week, he makes time for leisure activities such as walking in the Wicklow hills and playing golf at the weekend. "Golf is a kind of a balance. I don't use it for business purposes. It's a form of relaxation. I can very easily finish on a Friday evening and be on the golf course on Saturday. By the time I've played a couple of holes I've totally forgotten about what were the issues on the Friday. I'll end up perhaps not thinking about them until Monday. I've two lives. I work Monday to Friday and I relax Saturday and Sunday."
