In our last post on the OECD review, we
discussed how Ireland's policy
stance measured up against key criteria, looking at the performance of the
Social Insurance Fund. Another item on the OECD's agenda is that of
financial stability and how it is evaluated through international
analysis. The first step to this evaluation is to look at international comparisons.
As you can see from the chart below, in 2010,
Ireland ranked somewhat average in our public expenditure on pensions, with the inclusion of all
government pension costs; contributory, social welfare pensions, non-contributory pensions and public sector pensions.
If you look at the next chart, you can see that the projected
change in expenditure is quite significant between 2010 and 2060, Ireland projected to rank third on the table.
The charts highlight the rising
cost of State funded pensions which the National Pensions Reserve Fund (NPRF)
was intended to offset.
Broadly speaking 1/3rd
of the NPRF covered public sector pensions whilst 2/3rds covered social welfare
pensions.
The fastest increasing cost is
public sector pensions. These grew from an estimated capital cost of €75bn in
2007 to €129bn in 2009. No figures have been produced since, however it is
likely that that cost has continued growing.
Source: OECD Review of Pensions in Ireland, 14.09.2012. John Martin, Edward Whitehouse, Anna D'Addio, Andrew Reilly.
