Roughly 90 per cent of defined benefit (DB) pension schemes are currently underfunded, and a small number do not have sufficient assets to meet the entitlements of current pensioners, according to the Pensions Board.
However the Minister for Social and Family Affairs Mary Hanafin said the introduction of a pensions protection fund - whereby the State would partly guarantee pension funds when a company with an underfunded pension plan fails - is very unlikely, as it would prove "extraordinarily expensive".
"Pension funds are private personal investment funds. It's very hard for the State to come along and give blanket protection," the Minister said at the launch of the Board's 2008 annual report today.
Chief executive Brendan Kennedy criticised the investment approach adopted by many DB schemes which he said were "based on aggressive investment return assumptions" and failed to take enough account of potential downsides. The "perceived wisdom" that a very high proportion of pension funds must be invested in shares and property is not always appropriate, he explained.
One of the major concerns of the Board in 2008 was the failure of some employers in the construction sector to pass on pension contributions deducted from their employees to the Construction Worker's Pension Scheme.
In March last year, the Board successfully applied for an order in the High Court directing an construction sector employer to pay arrears of pension contributions in excess of €180,000.
The Board is currently investigating over 150 similar cases.