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THE PENSIONS BOARD

THE PENSIONS BOARD. Jerry Moriarty – Head of Investigations and Compliance 2/4/2004. The Irish System. First Pillar Flat Rate Pension Second Pillar Voluntary Occupational Schemes Third Pillar Individual pensions. First Pillar. Old Age Contributory, €167.30 per week

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THE PENSIONS BOARD

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  1. THE PENSIONS BOARD Jerry Moriarty – Head of Investigations and Compliance 2/4/2004

  2. The Irish System • First Pillar • Flat Rate Pension • Second Pillar • Voluntary Occupational Schemes • Third Pillar • Individual pensions

  3. First Pillar • Old Age Contributory, €167.30 per week • Gov. target to increase this to €200 by 2007 • Represents over 31% of average industrial wage • Target of National Pensions Policy Initiative is 34% of average industrial wage • Further non-cash benefits – free travel, TV licence, telephone rental, utility allowances from age 70

  4. Second and Third Pillar • Tax relief on contributions • Investment growth is tax-free • 50% of working population have supplementary pension coverage • Target is to increase this to 70%

  5. Comparisons with other EU members • Lowest population of older people in EU • Only member state with no compulsory income-related provision for majority of workers • Partial pre-financing of public pensions • Actuarial reviews of Social Insurance Fund

  6. DEMOGRAPHICS • Lowest population of older people in EU • 11.2% aged 65 or over • Remains roughly the same until 2013 • 15% in 2021 – 19% in 2031 – 28% in 2056 • Same issue as other countries but happens later

  7. Poverty • Living standards of older people low relative to people under 64 • However, percentage of household headed by person over 65 in consistent poverty has fallen from 12.5% in 1994 to 7.2% in 2000. • Target is to reduce this to 2% in 2007 and, if possible, to eliminate • Only country with no compulsory income related pension provision

  8. Meeting the Challenges • First Pillar • Increase state pension • Reduce reliance on means tested pension • Second and Third Pillar • Increase participation • Personal Retirement Savings Accounts • National Pensions Awareness Campaign

  9. National Pensions Reserve Fund • Launched in April 2002 • Intention to pre-fund public sector pensions and increase in first pillar provision • Cap Exchequer outlays at 6.5% of GNP from 2025 to 2055 (projection is 12.5%) • Proceeds of national telecommunications privatisation and 1% of GNP annually • Commercial mandate, no drawdown until 2025 • Most recent value was approximately €9.5b

  10. Budget 2004 • Increase in minimum normal retirement age for new entrants to public sector • 65 for most new entrants • 55 for police and prison officers • 50 for defence forces • Removal of compulsory retirement age for public sector employees

  11. THE PENSIONS BOARD Jerry Moriarty – Head of Investigations and Compliance 2/4/2004

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