Irish Pension Time Bomb

With increasing life expectancy and rising cost, Ireland, like many countries, is facing a pension time bomb. British Liberal statesman, David Lloyd-George (1863-1945), Chancellor of the Exchequer from 1905 to 1915, was toasted in many Irish homes for years after he introduced what was called the old age non-contributory pension in 1909. The Old Age Pensions Act of 1908 provided for the first non-contributory pension in Ireland of five shillings a week (ten shillings for husband and wife) for those aged seventy or over subject to a means test (initially established at an income of less than twenty-one pounds and ten shillings a year). At that time, the weekly payment for a labourer was about ten shillings a week and nothing for anyone without a job. Prior to that, the only public assistance then available were the workhouses and various relief schemes in times of famine. Older people, who were always respected, were now cherished, as many of them, especially in rural Ireland, became the highest income earners in their households and it was regular. Pensions eliminated considerable poverty and gave recipients a great sense of independence, dignity and recognition for their work through difficult times.

The qualifying age was reduced from seventy to sixty-six years by 1977 and the means test eased to a big extent. It is now known as the State Pension (Non-Contributory), a means-tested tax-financed payment for people aged sixty-six or over who do not qualify for a State Pension (Contributory), based on compulsory social insurance payments or for pensions from other sources. In addition to the State schemes, there are a wide range of occupational schemes, which supplement or,in the case of some public sector employees, replace social insurance pensions. Most are defined benefit schemes, where the pension payable is based on length of service in the scheme and earnings at retirement. Some are defined contribution schemes where the pension payable on retirement depends on what can be purchased with the amount contributed to the scheme and the returns earned. The Personal Retirement Savings Account (PRSA), a flexible, portable, long-term defined contribution scheme, was introduced to facilitate more people making provision for their retirements in a regular and flexible manner. Yet, only about half of the Irish work-force are members of occupational and personal pension schemes.

With expected longer lifespans, increasing cost of the State schemes, some defined benefit schemes are in serious deficit arising from the effects of the recent recession, and uncertainty regarding income from defined contribution schemes, Ireland has now to address a major pension time bomb. Various measures are being taken in some occupational schemes to increase contributions and reduce payments. The State pension age is rising to 66 in 2014 and to 68 in 2028. With continuing improvements in healthcare, changes in diet and lifestyle, and higher life expectancy, the retirement age could be put back to its original figure of 70 by 2050.

Bernard O'Hara's latest book entitled Killasser: Heritage of a Mayo Parish is now on sale in the USA and UK as a paperback book at amazon.com, amazon.co.uk or Barnes and Noble

It is also available as an eBook from the Apple iBookstore (for reading on iPad and iPhone), from Amazon.com and Amazon.co.uk (Kindle & Kindle Fire) and from Barnesandnoble.com (Nook tablet and eReader).

An earlier publication, a concise biography of Michael Davitt, entitled Davitt by Bernard O’Hara published in 2006 by Mayo County Council , is now available as Davitt: Irish Patriot and Father of the Land League by Bernard O’Hara, which was published in the USA by Tudor Gate Press (www.tudorgatepress.com) and is available from amazon.com and amazon.co.uk. It can be obtained as an eBook from the Apple iBookstore (for reading on iPad and iPhone), from Amazon.com and Amazon.co.uk (Kindle & Kindle Fire) and from Barnesandnoble.com (Nook tablet and eReader).