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.