A study of 25 state pension systems by the Australian Centre for Financial Studies and Mercer finds that Ireland’s State pension is ranked 6th in the world in terms of adequacy. However, Ireland’s overall score is reduced by doubts over its sustainability, where it is ranked 20th of 25 countries (above Italy, Austria, Brazil, Japan and China)
Overall, Ireland is ranked 11th of the countries surveyed in the Melbourne Mercer Global Pension Index (MMGPI) with a “score” of 63.1.
This compares to the 81.7 awarded to Denmark, which is seen as having a well-funded system, giving good coverage, a high level of assets and contributions, adequate benefits and a parallel private pension system with developed regulation.
Ireland’s system is characterised as one which “has some good features, but also has major risks and shortcomings that should be addressed. Without these improvements, its efficacy and long-term sustainability can be questioned”.
Ireland is on a par with Denmark on adequacy but is dramatically poorer for sustainability, a measure that assesses the likelihood that the system will be able to provide promised benefits into the future. It ranks 9th in terms of system integrity.
The overall index value for the Irish system could be increased by:
• increasing coverage of employees in occupational pension schemes thereby increasing the level of contributions and assets
• introducing a minimum level of mandatory contributions into a retirement savings fund
• providing greater protection of members’ accrued benefits in the case of employer insolvency
• reducing government debt as a percentage of GDP