Sir, – The claim that future Irish retirees are at risk of not having a State pension is ridiculous ("Warning that retired Irish workers not guaranteed State pension", October 22nd). It is yet another example of how the financial services sector is allowed free rein to spin all manner of hysterical nonsense in its never-ending lobbying to ensure the government of the day does its bidding.
If every retiree turned 65 on the same day and gave up working on the same day and had no other savings or pension provision, and there were no other people working in the country at the time, then it would be a disaster. But in reality that will never be the case and if it were, then pension would be the least of our worries. Furthermore, the pensions paid to retirees are not lost to the State. The cost from one side of the ledger is recouped on the other side through taxation, spending in local and national economies; even savings from pensions are subject to tax.
In its most recent report, the Australian Centre for Financial Studies, on whose figures the above claims were made, gave one country (Denmark) an A rating but no one is claiming that the pension schemes of all the other countries are about to go bust.
The financial services lobby may have a point that not enough Irish people save sufficiently for their retirement. Such an argument is part of a wider debate where the Government has failed to address Irish living costs so that people have sufficient extra income to save for a pension and in general. It has failed to address why two incomes are needed to service a 35-year mortgage on a small, bland, badly designed and poorly built house or why childcare and travel costs take up so much of a family’s income.
But another problem stems from the excessive charges and penalties applied by Irish product providers, which also prefer to deflect attention from the fact that most annual growth on pension funds is due to the tax relief added to the net premium and not any return generated by the industry. Take out the tax relief and the charges and perhaps attention might finally turn to why investments in Irish financial products provide such a poor return relative to similar investments in other countries.
But that would require breaking the financial conflict of interest between the political system and a financial services lobby that has free and unregulated access to government and a veto over the decision-making process. – Yours, etc,
DESMOND FitzGERALD,
Canary Wharf, London.