Government actions will ensure pension system is fit for purpose - Charlie O Connor
Posted on 04/03/10 by Charlie O’Connor
Responding to the challenges created by a declining workforce and an ageing population, the Government yesterday launched its national pension framework. It sets out concrete actions that will ensure that the pensions system is fit for purpose.
As we all know, people today are living longer. Thankfully, we have more productive and healthier lives. Today the average life expectancy is 76 for men and 81 for women. This is in stark contrast to 100 years ago when life expectancy was 50. While this is certainly to be welcomed, it nonetheless poses difficulties.
At the moment, there are approximately six people at work to support every pensioner. It is estimated that that by 2050, this figure will be less than two. This situation simply isn’t sustainable. The option is to either deal with the situation now or to ask future generations to bear the cost. In the interests of equity and fairness, the Government has decided to act now.
The key provisions in the framework relate to retirement age, auto-enrolment and the changes to the state pension.
Given that the current model allows people to spend almost as long in retirement as they do in the workforce, the Governemnt has decided to increase the state pension in three separate stages. In 2014, the state pension transition will be abolished with the effect of increasing the state pension age by one year to 66. In 2021, the pension age will increase to 67. This will affect people who are currently in the 50 – 55 age bracket. Finally, in 2028 the pension age will rise to 6. This will affect people who are currently 49 or under
Marking a major advancement in the Irish pension system, the framework introduces a new auto-enrolment system. This will increase the coverage for workers on low to middle incomes.Under the scheme the state, the employer and the employee will all contribute the pension. For every €1 euro that the employee puts in the state and the employer will put in €2. To allow for flexibility, people can opt out of the scheme as many times as they wish but they will be automatically re-enrolled after 2 years.
The framework makes a number of adjustments to the state pension in order to make it more straightforward and transparent. Under the new system, pension payments will be based on the total number of social insurance contributions made during a person’s working life. To qualify for the maximum payment, it is necessary to make contributions for 30 years. In addition to this, social insurance credits will replace current homemakers disregards i.e. This will be particularly beneficial to the many women across the country who take time out from work to stay at home to care for their families.
The wide- ranging measures introduced in the new pension framework will go a long way towards tackling the reality of our changing demographics. Some people might say that they simply cannot afford a pension. . However, can any of us really afford not to have a pension?
To find out more about the framework click on the link below.
http://www.welfare.ie/EN/Policy/PolicyPublications/Pensions/Pages/nationalpensionsframework.aspx
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'Responding to the challenges created by a declining workforce and an ageing population, the Government yesterday launched its national pension framework. It sets out concrete actions that will ensure that the pensions system is fit for purpose'.
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'Responding to the challenges created by a declining workforce and an ageing population, the Government yesterday launched its national pension framework. It sets out concrete actions that will ensure that the pensions system is fit for purpose'.
">
'Responding to the challenges created by a declining workforce and an ageing population, the Government yesterday launched its national pension framework. It sets out concrete actions that will ensure that the pensions system is fit for purpose'.
">
'Responding to the challenges created by a declining workforce and an ageing population, the Government yesterday launched its national pension framework. It sets out concrete actions that will ensure that the pensions system is fit for purpose'.
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