Society of Actuaries says the State's pension system is unsustainable in its current form

S

Sarenco

Registered User
Messages
7,895
https://web.actuaries.ie/sites/default/files/story/2015/12/151216 Press Release State Pension.pdf

The Society of Actuaries has published a detailed report by Milliman that adds to the growing body of research that concludes that the State's pension system is unsustainable in its current form and "doing nothing" is simply not an option.

The report highlights a number of potential options to improve the sustainability of the State's pension system and acknowledges that there is no easy solution.

This really should be a key issue in the forthcoming general election.
 
tell us something we dont know , the majority of current pensioners draw down far more than they ever put in to PRSI down the years yet the public perception is that most people on the state pension are on far less than they made in contributions

this will require a major shift in public opinion in the years to come
 
Broadly reflects the position raised on other threads re potential pensions shortfall! The options outlined are stark but the main fear is that this is a medium to long term problem and most politicians will feel that because the issue is not immediate they can put it on the long finger. In terms of an aging population Ireland would be in a much better balanced position than most of our European neighbours. However longevity and length of time people are dependent on pension income is really going to put more and more stress on the system as years progress. Realistically in time I see no way that those above 65/66 can rely on the OAP as their sole income source until death. Our out of date work models are partly to blame for this. ie. model is primarily based on the old 18-65 working life. leave school at 18 get a career job and retire at 65.
The model is fine if your employer has a good pension scheme in place and you can retire on a 50% of final salary index linked type pension. However it does not suit the modern working system where most people only commence working in their mid 20's and will most likely have a number of differing employers in their working life. Defined benefit pensions are as rare as hens teeth and because pension schemes are voluntary most of the 20's/30's age group have no interest in voluntarily giving up part of their wages for pensions when the benefit is so far in the future.
I know that it has been posited before but I feel that the only realistic solution to this issue is a standard "opt out" pension fund for every employee who receives a wage/salary beyond a stated amount (say above the living wage). Those who opt out to be made fully aware of the consequences of doing this and advised that there will be no safety net available to them upon retirement.
Pension age entitlement is also likely to rise and this is not a bad thing as 65 is no longer an age where people should retire. I have always believed that there is scope for employers to provide opportunities to continue work beyond 65 on a part time basis to those who are able/want to continue working past normal retirement age. The skills are mostly still there and while many of us would resent having to work full time post 65 the part time option would be worth considering.
This issue is not getting the attention it deserves and as usual the problem will be kicked down the road until it is too late to address properly. It is largely not relevant to TD's/Civil Servants because of the preserved pensions that they have so someone at a high level needs to champion the issue.
 
galway.
Todays pensioners may have paid down less in PRSI than they are drawing today and if State pensions are looked at in isolation then you have a case

Todays pensioners are those who carried our State thus far and most have contributed largely to state way above any actuarial prsi contributions.

I suppose the only ongoing solution is to properly charge out and price prsi properly (politicians won,t do it)

Public opinion I think is well aware that all State type pensions be they Public service etc are presently funded from States cash-flow and know it is dangerous.

There will be a reckoning ,but I think the perception of future trouble is well understood and will be addressed
 
Way over hyped imho
if you read report just moving to rpi increases instead of earnings and increasing retirement age in future ( above the 68 already planned ) more or less fixes problem
As actually stated in report The idea you can accurately predict that far in future is erroneous e.g in 50 years will be all European citizens with European pension ??? Will we have an extra 10 million refugees in Europe boosting workforce.....
Etc etc


A lot of fuss about nothing
 
The 68 year old limit is magical thinking, the % of people who can physically or mentally work until that age will be in single digits. Pensions will be subsidised by the general tax base, guess which group vote and have time to torment their TD's?
 
KlausFlouride said:
The 68 year old limit is magical thinking, the % of people who can physically or mentally work until that age will be in single digits
Click to expand...

I don't believe that's the case at all. The 68 year old of the future will be in far better shape both mentally and physically and will have plenty to offer in the workplace.
 
galway_blow_in said:
tell us something we dont know , the majority of current pensioners draw down far more than they ever put in to PRSI down the years yet the public perception is that most people on the state pension are on far less than they made in contributions
Click to expand...

The financing of the current system is purely pay as you go, nothing to do with contributions but all about the structure of the work force. On that side Ireland is in a better position than most.
 
Jim2007 said:
The financing of the current system is purely pay as you go, nothing to do with contributions but all about the structure of the work force. On that side Ireland is in a better position than most.
Click to expand...

i was saying that contrary to public opinion , the majority of those currently in receipt of the state pension , did not make sufficient contributions down the years to warrant current receipts , there has been a huge increase in the state pension since around 1997 and it wasnt touched during the recession since 2008
 
galway_blow_in said:
i was saying that contrary to public opinion , the majority of those currently in receipt of the state pension , did not make sufficient contributions down the years to warrant current receipts
Click to expand...

Amazing ..........people miss as Basil Fawlty says "the bleeding obvious"

If one pensioner has not contributed enough over 50 years of contributions then maybe the contributions of those who don't live long enough to collect their pension can make up the deficit = not all who contribute one many years live to collect their pension.

Like all Insurance its a percentage game...........the lucky ones collect if they live long enough.

Also, the ones who depart early after pension age subsidise the few who live longer than the, maybe into their 80's.

Jim2007 mentioned that its about the "structure of the workforce" and I agree (again Basil could be quoted here again), also - we are lucky to have a young workforce so in a better position that other countries.
 
The average industrial wage is around €35k a year, yes?

That's €1,400 of PRSI per year from the employee and €3,800 from the employer.

€208,000 gets contributed over a 40 year career.

The pension is €12k a year, so 17 years before one is getting back more than one has put in.
 
44brendan said:
I know that it has been posited before but I feel that the only realistic solution to this issue is a standard "opt out" pension fund for every employee who receives a wage/salary beyond a stated amount (say above the living wage). Those who opt out to be made fully aware of the consequences of doing this and advised that there will be no safety net available to them upon retirement.
Click to expand...

I do not believe this is realistic - most people will opt out faced with have to contribute around 10% or more of their income to their pension fund and of course with the time comes the politicians would face enormous pressure to do something - in other words tax or levy those who did not opt out. At present as a result of self directed pensions the average US baby boomer is expected to hit retirement age with a total net worth of around $22K, not even remotely close to being able to fund a pension for 20 to 30 years. It will be interesting to see how US politics change as a result.
 
galway_blow_in said:
i was saying that contrary to public opinion , the majority of those currently in receipt of the state pension , did not make sufficient contributions down the years to warrant current receipts , there has been a huge increase in the state pension since around 1997 and it wasnt touched during the recession since 2008
Click to expand...

Yes that was an attempt to recognise the fact that the pay as you go model will not work in the long run, but it still does not change the fact that the system is still based on the pay as you go model.
 
Gordon Gekko said:
The average industrial wage is around €35k a year, yes?

That's €1,400 of PRSI per year from the employee and €3,800 from the employer.

€208,000 gets contributed over a 40 year career.

The pension is €12k a year, so 17 years before one is getting back more than one has put in.
Click to expand...

Except that is not the model being used! The model is simply total pensions paid out this year should equal total contributions by the workforce this year! And as the work force ages this is not going to be possible, although Ireland will be hit later than most EU countries because our work force is still comparatively younger.
 
Gordon Gekko said:
The average industrial wage is around €35k a year, yes?

That's €1,400 of PRSI per year from the employee and €3,800 from the employer.

€208,000 gets contributed over a 40 year career.

The pension is €12k a year, so 17 years before one is getting back more than one has put in.
Click to expand...

except at least a quarter of those over 66 are on the non contributory pension , its only 11 quid per week less than the contributory and you receive it even you never paid a cent in tax down the years
 
Gordon Gekko said:
I don't believe that's the case at all. The 68 year old of the future will be in far better shape both mentally and physically and will have plenty to offer in the workplace.
Click to expand...

I hope you're right. And physically, quite likely. Mentally, though, don't see any advances on the horizon that will change that dramatically. Also if people are working later on in life, impacts jobs available for people trying to join the workforce.
 
Gordon Gekko said:
The average industrial wage is around €35k a year, yes?

That's €1,400 of PRSI per year from the employee and €3,800 from the employer.

€208,000 gets contributed over a 40 year career.

The pension is €12k a year, so 17 years before one is getting back more than one has put in.
Click to expand...

You are suggesting here that PRSI finances just the State Pension.

Note that PRSI must finance many other benefits as well, e.g.

JSB
Illness benefit
Carers benefit
etc.
 
To put the coming demographic changes into some perspective, the CSO has projected that:
  • The old population (those aged 65 years and over) will have increased from its 2011 level of 532,000 to between 850,000 and 860,700 by 2026, and to close to 1.4 million by 2046.
  • The very old population (those aged 80 years of age and over) is set to rise even more dramatically, increasing from 128,000 in 2011 to between 484,000 and 470,000 in 2046.
  • By 2046 the labour force will increase by 300,000 from 2011 levels and there could be up to 560,000 more older people than young.


ageingstats010513-p1-normal.gif
 
You must log in or register to reply here.
Back
Top