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CURRENT PENSIONS POLICY

Dublin Chamber of Commerce Business Briefing. CURRENT PENSIONS POLICY. Anne Maher 30 November, 2005 Chief Executive The Pensions Board. Agenda. Irish pension structure Initiatives to increase private pension coverage Some statistics Issues National Pensions Review What next?. 2.

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CURRENT PENSIONS POLICY

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  1. Dublin Chamber of Commerce Business Briefing CURRENT PENSIONS POLICY Anne Maher 30 November, 2005 Chief Executive The Pensions Board

  2. Agenda • Irish pension structure • Initiatives to increase private pension coverage • Some statistics • Issues • National Pensions Review • What next? 2

  3. Irish Pension Structure • Social Welfare pension providing either: • Old age contributory pension for those satisfying certain contribution conditions, or • Old age non-contributory pension subject to a means test for those not qualifying for contributory pension • Social Welfare pension arrangement funded on a pay-as-you-go basis supported by National Pensions Reserve Fund • Public Service pension scheme which faces greatly increased costs (also supported by National Pensions Reserve Fund) • Private Pensions on a voluntary basis arising from funded occupational pension schemes, personal pensions, Personal Retirement Savings Accounts which are tax encouraged 3

  4. Initiatives to Increase Private Pension Coverage • Personal Retirement Savings Accounts (PRSAs) • Mandatory Employer Access • National Pensions Awareness Campaign 4

  5. Some Statistics • National Pensions Reserve Fund • Contributions = 1% GNP per annum • Assets = €13.2 billion/11% GNP approximately • Payouts = 2025 – 2055 • Total private pension coverage • 52.4% of those at work • 59.1% of those aged over 30 at work 5

  6. Some Statistics • Occupational pension schemes • Number = 88,069 schemes / 726,405 members • Type = 68.9% Defined Benefit membership / 31.1% Defined Contribution membership • Assets = €62.3 billion • Investment returns = 15.4% year to date / 21.2% for last 12 months / 10.1% per annum over last 10 years • Personal pensions • Number of holders = 200,000/250,000 approximately • Type = money purchase with insurance companies 6

  7. Some Statistics • Personal Retirement Savings Accounts (PRSAs) • Number of providers = 10 • Number of products = 58 • Number of contracts sold = 59,251 • Assets of contracts sold = €328.929 million 7

  8. Some Statistics • SSIAs successful in attracting savings • 1,170,208 accounts opened • Average Irish savings shortfall per annum • €6.6 billion • 11% of income • €3,343 per person (Source: Quantifying the Retirement Savings Shortfall in Republic of Ireland. Report commissioned by Irish Insurance Federation April 2004) 8

  9. Issues • Private pension coverage – needs to increase to 70% of over 30s • Adequacy of private pension contributions – average 5% employer/5% employee contributions not enough • Funding of Defined Benefit schemes – 49% have deficiencies • EU Pensions Directive – opportunity for Ireland to be a centre for Pan-European pensions 9

  10. National Pensions Review • Pensions review “National Pensions Policy Initiative” (NPPI) took place 1996 – 1998 • NPPI recommendations implemented 1998 – 2002 • Statutory requirement for progress review by September 2006 • Minister brought forward September 2006 review to 2005 (“National Pensions Review”) • National Pensions Review completed and presented to Minister on 7 November 2005 10

  11. What Next? • Government response to National Pensions Review? • Changes to current pensions policy? • Will Pan-European pension opportunities for Ireland develop? 11

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