Recently, state pension liabilities have been on the rise at around 10% annually, according to a recent studying involving Ireland’s pensions, it claims that pension schemes across Ireland have over €600 billion worth of liabilities. The study analyzes are many Irish households were privately owned by employers and the government, finding that the State pension accounts for almost 60% of all liabilities. Within that, the public sector pensions account for nearly a quarter while the private sector pensions are around 16%.
Overall, the pension liabilities within Ireland has increased by 7%, however, there are still differences in the positions of such schemes. The liabilities of private sector schemes has increased at just over 1%, while the public sector schemes have almost increased by 10% for state pension liabilities. One of the biggest issues is the sustainability of the current State pension scheme and whether the age requirement on the scheme will rise to 67 as previously planned, and then to 68 in 2028.
The study in 2018 shows that Ireland’s total pension liability at that time was equal to 186% of the national GDP, which is a standard international measure fo the state of an economy. However, it was also equal to 306% of the GNI, which is another measurement that can more accurately show the state of the Irish economy after factoring out the strong impact of multinational companies within the State.
Ireland’s pension liability is considerably low when compared to other European nations, which can be explained by Ireland’s relatively younger population. The Chartered Accountants Ireland has stated that they offer further evidence of the scale of the pensions challenge that is currently holding the state hostage. It’s revealed the Irish government announced it will delay the introduction of auto-enrolment until 2023. And with the hold of the auto-enrolment processes, the lack of private pension funding isn’t going to be solved without interference from the government. The lack the private pension provision has been on the agenda of many organizations within Ireland for over two decades, and the government has put little to no consideration into this issue. The approach is unsustainable and the pensions system is simply not as efficient as other countries.
Lucas Zhang was a Finance major at Ohio State University. He writes about finance, mortgages, and technology for Irish Mortgage Brokers.
Relevant Links: Increasing State pension age, Cost of Public sector pensions