Minister Varadkar says current State pension is unsustainable...

Unless I missed it, I don't believe any of that sum came from the NPRF.

Massive amount of money, for sure, but I don't think it really has anything to do with the topic under discussion.

What do you think is the best way to address the looming pension crisis?

True, but I suppose the argument could be made that if there had been more in the pension reserve fund, other source of capital/funding wouldn't have been considered.

As for what the best ways to address the crisis, it won't be a single item but I would consider continuing raising the state pension age each 7 years to 70 or more. Decoupling contributory and non-con pensions. PRSI funds should be separated from State annual income and put aside for the purpose it was created and then, under review, should be increased appropriately to meet future needs.
Automatic enrolment in private schemes would be a key point with compulsory minimum matched employer contributions. It obviously should be a long term plan but no politician today seems to be demanding such action from their party even though, you'd imagine, the younger members would hope/expect to still be politicking when the This post will be deleted if not edited to remove bad language hits the fan.
 
The State pension age is already rising to 70.

Mandatory employer contributions would cripple small businesses.

My own view is there needs to be a sustained campaign to educate people around the misery they face in retirement if they don't plan.

Around means testing etc, imagine telling someone on €250k a year that his 4% and his employer's 10.75% will yield him nothing on the pension side...Ireland, a great place to be a waster, but an awful place to do your best in.
 
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What do you think is the best way to address the looming pension crisis?
Bring back smoking, and further disprove the healthcare system :)

GG:
My own view is there needs to be a sustained campaign to educate people around the misery they face in retirement if they don't plan.

Around means testing etc, imagine telling someone on €250k a year that his 4% and his employer's 10.75% will yield him nothing on the pension side...Ireland, a great place to be a waster, but an awful place to do your best in.

That sums it up, once you add in all without pension pots are victims
 
My own view is there needs to be a sustained campaign to educate people around the misery they face in retirement if they don't plan.
The biggest difficulty here is the number of pension schemes that are "opt in" rather than "opt out". I.e. Workers upon joining a firm are given the option of joining the pension plan. In such a scenario the vast majority of employees will put the issue on the long finger. They see the benefits of saving for a pension but also look at the fact that funds will be deducted from their salary now which will only benefit them in 20/30 years time. Human nature being what it is most will decide that they would prefer/need the funds now and have plenty of time to put aside funds for a pension. Old age seems a lifetime away when your young!
Most pension advisors would state that a simple change in schemes where the employee is automatically enrolled into the pension scheme upon taking up employment and must sign a opt out form including a "health warning" would result in a significantly higher level of personal pensions and resultant less demand on the public pension in retirement.
 
The State pension age is already rising to 70.

Mandatory employer contributions would cripple small businesses.

My own view is there needs to be a sustained campaign to educate people around the misery they face in retirement if they don't plan.

Around means testing etc, imagine telling someone on €250k a year that his 4% and his employer's 10.75% will yield him nothing on the pension side...Ireland, a great place to be a waster, but an awful place to do your best in.
For the record I'm pretty sure the state pension age is only going from 65 to 68, at least in what's announced anyway. I think it should go up at least another 2 years, once each 7 years as currently scheduled and then in line with lifespan advances, which are probably rising at a faster rate anyway!
(P.S. I see the Irish Times article says once every decade but I think that's too slow).

And ANY increase cripples small businesses, with lead in times this should be factored into their wage discussions with staff. Note I said mandatory MATCHED contributions so the employee has responsibility here too.

+1 on your final point but we've proven as a nation that these sort of pronouncements in public have generally met with little (political/societal) support.
 
For the record I'm pretty sure the state pension age is only going from 65 to 68, at least in what's announced anyway. I think it should go up at least another 2 years, once each 7 years as currently scheduled and then in line with lifespan advances, which are probably rising at a faster rate anyway!
(P.S. I see the Irish Times article says once every decade but I think that's too slow).

And ANY increase cripples small businesses, with lead in times this should be factored into their wage discussions with staff. Note I said mandatory MATCHED contributions so the employee has responsibility here too.

+1 on your final point but we've proven as a nation that these sort of pronouncements in public have generally met with little (political/societal) support.

Rob I think very few would agree with your view on raising the state pension age. It might suit the Government but the ordinary worker wouldn't buy it. Currently I have to retire at 65 but for me State pension is not available till 68. My employer won't allow me work on so what do you do with retirees who retire at 65 but cannot avail of the pension till 70.
 
My employer won't allow me work on so what do you do with retirees who retire at 65 but cannot avail of the pension till 70.

I think this is one of the key problems with simply increasing the retirement age as a solution to this issue (although I certainly agree that it has to form part of the mix of policy responses).

The harsh reality is a substantial number of individuals will not be in a position to work past 65 for a variety of reasons and will often be entitled to other social welfare benefits in the interim period before they are entitled to draw a State pension. So the savings to the social fund by simply increasing the retirement age may not actually be as significant as it might first appear.
 
Rob I think very few would agree with your view on raising the state pension age. It might suit the Government but the ordinary worker wouldn't buy it. Currently I have to retire at 65 but for me State pension is not available till 68. My employer won't allow me work on so what do you do with retirees who retire at 65 but cannot avail of the pension till 70.

That's fair enough... but what would you suggest we do instead? The ordinary worker is paying for the pensioners now and that will be the case in years to come unless there's meaningful change.

I think this is one of the key problems with simply increasing the retirement age as a solution to this issue (although I certainly agree that it has to form part of the mix of policy responses).

The harsh reality is a substantial number of individuals will not be in a position to work past 65 for a variety of reasons and will often be entitled to other social welfare benefits in the interim period before they are entitled to draw a State pension. So the savings to the social fund by simply increasing the retirement age may not actually be as significant as it might first appear.

I was thinking that - but isn't that an issue with the schemes in question, rather than the macro position? And with increased life expectancy doesn't the number of healthy years increase too (i.e. more people can work more years)?
 
The biggest difficulty here is the number of pension schemes that are "opt in" rather than "opt out". I.e. Workers upon joining a firm are given the option of joining the pension plan. In such a scenario the vast majority of employees will put the issue on the long finger. They see the benefits of saving for a pension but also look at the fact that funds will be deducted from their salary now which will only benefit them in 20/30 years time. Human nature being what it is most will decide that they would prefer/need the funds now and have plenty of time to put aside funds for a pension. Old age seems a lifetime away when your young!
Most pension advisors would state that a simple change in schemes where the employee is automatically enrolled into the pension scheme upon taking up employment and must sign a opt out form including a "health warning" would result in a significantly higher level of personal pensions and resultant less demand on the public pension in retirement.

One thing that always strikes me is why they never teach some basics of finance and financial planning in schools. Basic things like budgeting and planning for retirement. I know it is touched upon in some subjects, but not enough, in my opinion. Could do wonders for peoples' thinking.
 
I was thinking that - but isn't that an issue with the schemes in question, rather than the macro position? And with increased life expectancy doesn't the number of healthy years increase too (i.e. more people can work more years)?
There has also been a major change in working years since retirement at 65 was input as the norm. Given that 3rd level is now more the norm than the exception for most occupations the entry age to the workplace is nearing 24/25. When I started work it was 18! Taking into account also the increase in lifespan and healthcare improvements 65 is now the new 55. There is no reason why anyone who is in good health should need to retire at 65. There is a need for a rethink on the current process of working full time from age 24/25 to age 65 and then just retiring and spending the rest of one's life waiting for death (ok I know it's not quite like that!!). There is plenty of scope to scale back work from early 60's and health permitting work on to at least 70. This could be a few days a week or job sharing or working part time from home etc. There are very many people of retirement age who while having no desire to keep on a full time employment with all of the stresses and strains would welcome an opportunity to continue work on a part time basis and maintaining a lower income level. The State could but some incentive system in place for employer to introduce this practice. It would not necessarily result in a promotion block for younger employees as those staying could be moved from their current positions and would be on reduced level of salaries.
 
There is no reason why anyone who is in good health should need to retire at 65.

I suppose it depends on the occupation - I don't think I'd fancy digging ditches in my dotage!

I think we also have to acknowledge that our ability to innovate or think creatively generally declines with age. I think it's pretty well established that creative output climaxes around our late 30s or early 40s, and then undergoes a slow decline as we age. A person's best work tends to appear at roughly the same age as their output peaks.

Youth unemployment (or under-employment) is a significant issue in most developed economies. If older workers continue to occupy positions that could otherwise be filled by younger workers, we could be denying these younger workers an opportunity to contribute at a time when their creative productivity is at its peak. At a societal level, we could therefore be exacerbating, rather than alleviating, the core problem by simply retaining older workers in the workforce for ever longer time periods.

One area we could possibly look at is abandoning the idea of a fixed retirement age altogether so that workers could chose to draw a reduced State pension at 65 or an enhanced pension at a later age (with the age related reductions/enhancements calculated on an actuarial basis).

However, this is really just tinkering around the edges of the problem. Ultimately, we will have to accept that retaining the State pension at its current level will be unsustainable in the future. The only question remaining in my mind is whether the necessary adjustment is started now or whether the entire adjustment is left to borne by future retirees.
 
Indexing of welfare payments favoured by Varadkar
"Indexing social welfare payments is favoured by Minister for Social Protection Leo Varadkar who said it will protect the less well-off and he hopes to bring in legislation to that effect.

...

He hopes to secure cross-party support for legislation to that effect and bring it through the Oireachtas, the minister said."

And the shocking thing is that he may well get cross-party support for it. Not one TD will oppose this ridiculous proposal.

 
Hi Brendan

Does wage inflation not provide a natural hedge?

i.e. the 4% that they're collecting from most of us is growing, so is it the worst thing in the world to provide OAPs with a degree of certainty?

Gordon
 
If it's certainty you want, the best thing to do is to cut pensions and other social welfare to a level which might be affordable in the long-term.

I love the theory of paying good pensions and social welfare. But we simply can't afford them. At the moment we can borrow to pay them, but we won't be able to do that indefinitely.

The thread started with the Minister saying that the state pension is unsustainable. But a week later he wants to change the legislation to make it even more so in the long term.

Brendan
 
Surely we should be focusing on a basic pension for all citizens in their old age .In my humble opinion this basic pension should be the same for all. If a person wants a better pension they will have to pay for it.
Lets look at say an ex-minister on a pension of say 100k. I would need to have 3 million to buy such a pension. Lets look at a Garda Super. probably 180k tax free lump upon retirement and 60k a year pension. This is what is strangling the country.As one poster above mentioned education is key to all this. Presently at leaving cert extra points are awarded to students who take up honours Maths.
The very same students have absolutely no idea how much net income they would earn if they took up employment. Lets forget about the angle of the dangle and all that and educate young people on relevant material around practical issues that will affect them
them right up to pension age. (probably 90 years of age by the time they get there the way its going:( )
 
I suppose it depends on the occupation - I don't think I'd fancy digging ditches in my dotage!

I think we also have to acknowledge that our ability to innovate or think creatively generally declines with age. I think it's pretty well established that creative output climaxes around our late 30s or early 40s, and then undergoes a slow decline as we age. A person's best work tends to appear at roughly the same age as their output peaks.
Creativity is not necessary in many jobs though.


Youth unemployment (or under-employment) is a significant issue in most developed economies. If older workers continue to occupy positions that could otherwise be filled by younger workers, we could be denying these younger workers an opportunity to contribute at a time when their creative productivity is at its peak. At a societal level, we could therefore be exacerbating, rather than alleviating, the core problem by simply retaining older workers in the workforce for ever longer time periods.
But as less people are born / entering the work force so one could imagine that increasing the retirement age will also help in tackling this problem.

Ultimately, we will have to accept that retaining the State pension at its current level will be unsustainable in the future. The only question remaining in my mind is whether the necessary adjustment is started now or whether the entire adjustment is left to borne by future retirees.


It looks like politicians would like to push this decision far into the future.
 
Indexing of welfare payments favoured by Varadkar
"Indexing social welfare payments is favoured by Minister for Social Protection Leo Varadkar who said it will protect the less well-off and he hopes to bring in legislation to that effect.

...

He hopes to secure cross-party support for legislation to that effect and bring it through the Oireachtas, the minister said."

And the shocking thing is that he may well get cross-party support for it. Not one TD will oppose this ridiculous proposal.

Less a Damascene conversion than a conversion on the road to the Taoiseach's office perhaps
Whatever happened to the Leo despised by all on the left & hugely distrusted by Trade Unions ?
In any event - welcome aboard Brother !
 
Less a Damascene conversion than a conversion on the road to the Taoiseach's office perhaps
Whatever happened to the Leo despised by all on the left & hugely distrusted by Trade Unions ?
In any event - welcome aboard Brother !

Bribing the grey vote with their grandchildren's money is always the easiest route to success in the moral cesspool that is Irish politics.
 
I understood that Brother - sorry Minister Varadkar's comments related to Social Welfare payments as opposed to the OAP ?
 
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