The Government has been called on to take action to avoid future increases in retirement poverty
The current old age or retirement benefits paid by the State are unsustainable, and the deficit in the funds available to finance it will be equivalent to 35% of the benefits it pays out within about twenty years, according to analysis from the country’s largest pension provider, Irish Life.
Following a detailed analysis carried out for the company by consultants, McKinsey, Irish Life says about 70% of Irish households currently can expect not to experience a significant shock to their income in retirement – this is mainly because the State pension represents a sizeable proportion of the employment income of lower paid households.
However, it warns that if the State does not take action the retirement readiness index will drop from 71% to below 50% - as up to half of Irish households could face a very sizeable cut in retirement income and many more will face retirement poverty.
Bill Kyle, Group Chief Executive of Irish Life Group is a Canadian and worked with the government there when its old age pension fund faced a similar funding deficit twenty years ago, he joined Vincent Wall on Breakfast Business this morning.
He warned that the solution to this problem may not prove popular - but he says something needs to be done by the Government urgently.