'Fat cat' funds give modest income

THE average size of a self-administered pension scheme is less than €500,000, which would give a modest pension in retirement.

These schemes are favoured by company directors self-employed and are sometimes characterised as "fat cat pension funds".

But new research gives the lie to perceptions that large tax-free funds have been accumulated in these self-administered schemes. Research commissioned by a new body, the Association of Pensioner Trustees in Ireland (APTI), shows that the average self-administered fund has just €430,000 accumulated in it.

This would give a weekly pension of just €275, or €14,298 a year, Tiernan Clarke of APTI said.

The research, carried out by actuarial consultants Milliman, found that there were 7,200 self-administered schemes in the country.

Self-administered schemes are an alternative to personal pensions, with the added attraction that those who have one can control how the fund is invested. They are available to employees but generally tend to be put in place by company directors.

Directors who have such a pension arrangement can get their company to make contributions to the fund.

Scrutiny

Self-administered schemes must have a Pensioner trustee who is a Revenue Commissioner appointee overseeing the activity of the funds.

Mr Clarke said the research had shown that they were nothing like as valuable as some commentators maintain.

"Recent comments in the media that have suggested self-administered pension funds are the preserve of 'fat cats' don't stand up to scrutiny.

"Claims that average fund sizes run into millions are simply not correct and the research by Milliman clearly proves this," he added.

A 65-year-old who retires with a fund size of €430,000 today would get a pension of just €14,298 per annum, or €275 a week, Mr Clarke explained.

"I think it is important that the right information gets into the public domain, particularly at this time when pensions are under such a spotlight."