IRELAND - Pensions policy must switch from a narrow focus on increasing coverage to protecting the adequacy and coverage of existing pension schemes a study on pension provision in Ireland, has argued.
The study’s author, Shane Whelan of the University of College Dublin, said introducing additional pension compulsion on top of the mandatory pay-related social insurance based State Pension Scheme may be politically unworkable.
The report, commissioned by the Irish Association of Pension Funds, was designed to provoke further debate on national pensions policy and in particular examine the issue of introducing compulsory savings for pensions.
It said despite a move in other countries to introduce compulsory defined contribution schemes to defuse the pensions crisis, it was too early to review such schemes as no significant benefits had been paid out.
Whelan concluded the Irish pensions system is considerably less constrained by considerations of financial sustainability than its European counterparts.
He said: “Even when projected to the year 2050, allowing for the expected dramatic fall of the pensioner support ratio in Ireland, the estimated cost of maintaining our current system (with pensions indexed to wages) is still lower for Ireland in 2050 than the average cost for the EU in 2000.”
Chairman of the IAPF, Joe Byrne, commented: “The Whelan report strongly suggests that the government has the capacity to diffuse Ireland’s pensions crisis firstly by eliminating regulatory barriers to defined benefit schemes and secondly by incentivising contributions to defined contribution schemes.
Other key findings in the study included that the majority of the current retired population is nearly wholly dependent on the State pension; and the predominance of defined benefit schemes in the past was generally sufficient to put retired persons who were in said schemes in the top 40% of the retired population by income.
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