Dublin: Indications that the pension system in the country is on the path of policy change. It is expected that there will be new changes in the pension by next January. The pension system will be broken up based on the recommendations of the Fiscal Advisory Group and other studies.
The financial challenges posed by the current pension system in the country have already been brought to the attention of the government. Financial advisors Almond Financial conducted a study on the pension systems of thirty countries in Europe earlier this year.
Accordingly, the study found that pensions here are paid at a rate above the breakeven point between cost of living and income. The study offered some innovative suggestions to make the system more sustainable.
It has put forward an option to change the payment of pension to retirees at a higher weekly payment rate till the end of their lives.
It is observed that the revised pension reforms may come into effect next January. It will also give workers the option to raise their current pension age from 66 to 70. Those who do so will be entitled to a higher weekly payment of €315.
But pensions expert and financial adviser Frank Conway says €315 isn't a good option. He suggests that the pension amount should be increased to 400 euros.
Currently, the government spends around €14,000 a year (€265.30 a week) on pensions. He points out that if extended over four years, people would lose €56,000 in pension income.
The Pensions Commission had recommended a gradual increase in the pension age to 67 in 2031 and 68 in 2039. The commission suggested that a pension fund be set up using corporation tax and the income topped up by windfall corporation tax receipts, then invested in a ring-fenced fund.
The advisory council has long warned the government about the cost of funding pensions as the proportion of retirees is expected to double in the coming decades.