The Government started a consultation on how to restructure the pensions system to meet Ireland's growing population of retirees when it published its Green Paper on pensions in Dublin today.
The long-delayed document that was due to be published in March does not make any specific proposals. Instead the Green Paper offers a number of possibilities including maintaining the status quo, universal provision, increasing social welfare pensions, SSIA-type tax incentives and soft mandatory and mandatory approaches and invites submissions from interested parties.
At the launch of the document the Minister for Social and Family Affairs Martin Cullen said he would like to encourage people to see their pension in the same way as they view their house, as an asset.
Also published today were actuarial estimates of how quickly the percentage of people requiring pensions is expected rise over the coming decades.
They suggest that the current ratio of six adults of working age for every one retiree currently will fall to just two adults of working age for every person over 65 years-of-age by 2061. The proportion of the population aged over 65 is expected to more than double to 28 per cent by 2050.
At the same time, life expectancy is improving and people are living longer meaning they will be dependent on their pensions for longer.
Minister Cullen said average life expectancy for men was currently 81 and for women it was 84. By 2036 men will be living to 86 and women to 89 he said.
"That translates into an increase of up to 40 per cent over the period and this will be reflected in pension costs, as the longer a pension is paid out the more expensive it becomes," Mr Cullen said.
The National Pension Reserve Fund, while farsighted, will not be able to meet the additional demand for pensions. He said more than a million people would have to rely on the social welfare pension unless action was taken and said that there were concerns that many people with private pensions were not making an adequate provision.
Asked whether the aim of a "fair" pension system for all would see reform of the public service pension system, Mr Cullen said the consultation could not start with preconditions.
"Clearly people who work within the public service have a very good pension . . . " he said.
The consultation process will remain open until the middle of next year and Mr Cullen said he hoped to be able to bring forward a legislative framework by the end of that year.
The Green Paper was unveiled by Taoiseach Bertie Ahern, Tánaiste and Minister for Finance Brian Cowen along with Mr Cullen.
Mr Ahern said at today's press conference: "Now that we are living fuller, longer and more productive lives, we need to shift our thinking.
"Let us look at how we can create advantage from demographic trends to enhance the quality of life of individuals. The pensions issue is a challenge which will be facing us for decades to come and will require a fair and flexible approach."
Mr Cowen said the issues presented a "difficult challenge in ensuring the financial and economic sustainability of our pension system as the task of financing increased spending on pensions falls to a diminishing share of the population".
Mr Cullen said he hoped the consultation period would result in consensus from all the vested interested, but admitted it would not be easy.
"We need to consider the type of retirement we want and how we might pay for it. I am pleased that we are about to embark on that debate."
Brendan McEvoy, head of marketing with Irish Life, said the success of the SSIA scheme illustrated the potential of such a model for the pensions industry. "We've researched this issue carefully and if we were to replicate the SSIA model for pensions, I believe we would see a dramatic increase in the number of people saving for retirement."
Olwyn Enright, Fine Gael's social and family affairs spokeswoman described the Green Paper as "254 pages of nothing" because it lacked a single concrete proposal.
"This doesn't move the debate on one iota since the Pensions Board Recommendations in 2006 with the Green Paper is full of options and no decisions. "After ten years in power, evasion by Fianna Fáil on such a vital issue is inexcusable", she said.
The Society of Actuaries welcomed the paper and said it looked forward to taking part in the consultation process.
In a statement, the body said it welcomed the opportunity afforded by the consultation process to advance the debate on ways of improving the adequacy of pensions provision.
"A key element of this is providing further education on the need for pension provision and on desirable levels of provision."
