Casey: Ireland could face pension crisis

IRELAND is less exposed to the global credit crunch than other jurisdictions but the country could be facing a pension crisis.

This is according to the chairman of Financial Services Ireland, Denis Casey, who said the disruption of the international credit market presents new challenges for all involved in financial services.

“While conditions are more testing than they have been for some time, we should be measured in our assessment for the next 12 months. Ireland’s risk-based approach to regulation and our focus on capital adequacy is serving us well through the current testing conditions.

“Ireland’s regulatory approach focuses on the fundamentals of having well-run entities with professional management and enough capital to meet their commitments.

“This approach has meant we have been less exposed than other jurisdictions to the turbulent conditions,” he said.

Jurisdictions with a rulebook approach to financial regulation are experiencing the shortcomings of this type of system.

“These shortcomings were clearly demonstrated in the case of Northern Rock in Britain and in relation to the issues that arose with German structured investment vehicles.”

Mr Casey is calling for a re-think of the Government’s pension policy.

“The biggest financial challenge facing Ireland is the massive shortfall in retirement savings. Almost half the workforce in this country has no pension arrangements. This will inevitably lead to the emergence of a pensioner underclass. The Government’s recent green paper gives us an opportunity to come up with novel solutions to this problem.”

Mr Casey also called for a scheme as easily understood as the SSIA scheme to encourage people to invest in their pensions.