Irish people are over-reliant on the State pension and as a result are putting huge pressure on the entire pension system. In 2010, there were 6 workers for every person retiring. In 2051 there will be two workers for every person retiring and by then there will be 1.8million people over the age of 65, compared to the present figure of 465,000 today. Will the government of the day be able to afford to even pay out the weekly State Pension then ?
Pensions firm Mercer claims that workers need to put more money into a private pension scheme instead of expecting the State payout to be there when they finally retire. Its survey ranked Ireland 20th out of 25 countries for the strength of the pension system here.
Mercer said it measures pensions systems against more than 40 indicators under the including adequacy, sustainability and integrity. Mercer’s Mairead O’Mahony claimed an “auto-enroll” system would help reduce the risks in the system at present. “The introduction of an auto-enrolment system would serve to increase participation in private pension saving and would be a strong step in the right direction,” Ms O’Mahony said.
“However, we need to ensure that this is matched by a commitment to improve plan engagement to ensure that members have a clear understanding of the savings they will need for their retirement,” she said. Denmark was named as having the most robust pensions system. The results of the report may be met with a shrug in some quarters given Mercer’s role as a pensions manager. However, it does throw the spotlight on the ongoing worry that younger people in particular are not saving for retirement and may end up relying on a State pension that could be worth substantially less in real terms in 30 or 40 years’ time. John Lowe, The Money Doctor, has stated on many occasions that this is a ticking time-bomb. Falling birth rate and increasing life expectancy are all factors that are going to massively impact in years to come. Everybody agrees that this is a potential disaster but as yet nobody in authority has addressed the situation adequately. Various Governments have commissioned reports, conducted reviews and even promised legislation but to date nothing has happened. The time has come when we need action.