At a recent consultation forum in Farmleigh House, the OECD presented the first part of their review of pension policy in Ireland. The presentation, which focused on the initial stage of the review; assessment and evaluation, was presented by John Martin and Ed Whitehouse. ITC's Managing Director Aidan McLoughlin attended the forum and over the coming weeks we will bring you some of the main points discussed.
As mentioned, the initial stage of the review is the assessment and evaluation stage. The second stage which will presented at the end of the year will see recommendations from the OECD.
The OECD set out a three-pronged strategy for achieving both adequacy and sustainability:
- longer working lives
- greater private-pension savings
- better targeting of public retirement- income provision on those most in need
They ask how does Ireland's policy stance measure up against key criteria?
A key test was the
performance of the Social Insurance Fund. This is where PRSI contributions are
paid and which will ultimately provide contributors with Social Welfare
pensions. Its ability to do this depends on its solvency. As the following
slide illustrates the view of 2010 (as projected in 2007) and the actual
outcome is radically different – a 30% deficit has now materialised. This
fundamentally challenges the ability of the State to continue to deliver Social
Welfare pensions at current levels. Those relying on the State for a
significant portion of their retirement income should think again.
Over the coming weeks we will discuss the steps taken to resolve this significant deficit and see overseas comparisons in relation to pension provision.
Source: OECD Review of Pensions in Ireland, 14.09.2012. John Martin, Edward Whitehouse, Anna D'Addio, Andrew Reilly.
