Irish pensions set to see another fall

Irish pensioners are projected to suffer the biggest fall in the real value of their occupational pensions in the EU over the next few decades, according to European Commission figures.

Increasing the length of time people work before qualifying for a pension and linking it to changes in life expectancy is a key recommendation in reforms put forward in Brussels.

At present about a quarter of the EU population is over 65 but by 2050, this will have doubled, so for every pensioner there will be just two people working, the Commission warns.

Generally, retired people have adequate pensions at 94% of the average income of the population. But this will not be possible to maintain as the population ages.

Without changes to occupational and other Irish supplementary pension schemes, people retiring in 2048 would be 15% worse off than in 2008. But even raising the retirement age to 67, they will still be about 12.5% worse off. Irish occupational or private pension schemes were the worst hit in the EU by the crisis.

There were no figures available to show the effect of the Government’s plans to increase the state pension age to 66 in 2014, 67 in 2021 and 68 in 2028.

Ireland was one of the leaders in raising the retirement age , said László Andor, Social Affairs Commissioner, as he launched the white paper on pension reform.

People spend about a third of their adult life in retirement now, and this will increase as people live longer. Increasing the retirement age in line with future gains in life expectancy could cut in half the additional amount of money needed to fund pensions over the next 50 years, he said.

Working for longer means people must remain active, healthy and independent for longer, which will mean adapting workplaces to the needs of older people, life-long learning opportunities, and removing obstacles to creating suitable end-of-career jobs.

Financial disincentives such as tax schemes should be reviewed and the difference between men and women’s pensions must be eliminated. Currently 22% of women over the age of 75 years are below the poverty threshold.

The Commission recommends that more attention is paid to private pension schemes but recognised that they need to be protected from the market — as happened in Ireland where they lost about 50% of their value in the sub-prime crisis.

Labour MEP Emer Costello said that public pensions must be the backbone of the national pension systems in reform. “A good state pension is the best guarantee of an income in which to live with dignity”.