50% cut to State pension ‘inevitable’

Cuts of up to 50% to the real value of the State’s old-age pension are inevitable, according to research by the Trusted Advisor Group.

The Department of Social Protection is currently awaiting the publication of an OECD review on Irish State pensions. The department plans to base its future pensions policy around the report.

A spokesperson for the department said savings had to be found within the social welfare system.

“Given the scale of the fiscal crisis and because spending on social protection accounts for nearly 40% of current Government expenditure, you will appreciate that savings have to be found in the social welfare system. The basic rate of pension has not changed and has been maintained at 34% of average earnings,” the spokesperson said

“Long-term pension policy is currently being reviewed by the OECD who will report later in the year. The OECD report will inform the overall direction of longer term pension policy.”

Trusted Advisor Group chief executive Paul Sutton said the values of the State pension are set to decline for the foreseeable future due to stealth cuts and inflation.

“Many people think that the State pension will be sufficient to support them in retirement but any assessment of the expected spiralling cost of this benefit will conclude that, at best, it will be cut consistently over the next 20 years, potentially by up to 50% of the current value,” he said.

“Stealth cuts in social welfare benefits have already commenced through changes to the qualifying criteria and we believe further changes are in the pipeline.”

Mr Sutton added: “We don’t wish to worry those dependent on this payment, but equally, we would like those that haven’t reached retirement age to realise that they cannot rely solely on this payment to provide any reasonable sort of lifestyle in retirement.”