And half of those sponsors contribute generously to the DC plans
Most Ireland-based plan sponsors opted to replace frozen or closed defined benefit funds with defined contribution plans, said the 2018 edition of the Irish Association of Pension Funds' defined benefit survey.
The IAPF survey of 65 companies with retirement savings of more than €20 billion ($23.3 billion) showed 88% of sponsors replaced DB funds with DC arrangements and about half of those paid more than the traditional employer contribution rate of 5%, even exceeding 10%.
Contribution matching by employers was the most common contribution method for the majority of the new DC plans, the survey found. For some 44% of the newly launched DC plans, employers matched employee contributions, up to between 10% and 15% of salary, while 8% of the surveyed employers contributed more than 15% of salary.
Only 20% of the surveyed plan sponsors still maintain an active defined benefit plan that is open to new entrants and whose participants continue to accrue benefits compared to 74% of Irish companies that have legacy DB arrangements closed to new participants, half of which are already frozen.
"While the migration from the much-coveted defined benefit funds over the last few years has been difficult for many employees, our survey has revealed that those employers who have replaced the DB pension fund with a DC plan are making relatively generous contributions into those plans on behalf of employees," said Jerry Moriarty, CEO of the IAPF, in a release accompanying the survey.