Ireland’s pension system has ranked 13th in a global index of retirement income systems, as it was rated strongly on integrity and adequacy but ranked relatively low on sustainability.
The Mercer CFA Institute Global Pension Index 2023 has seen Ireland place 13th out of 47 countries included, up from 14th place last year, and receiving an overall B grade.
Pensions consultant Mercer prepares the Global Pension Index each year in collaboration with the Monash Centre for Financial Studies in Australia. The research is sponsored by CFA Institute, the global investment professionals association.
The Irish pension system’s index value increased from 70.0 in 2022 to 70.2 this year, the third year in a row that the Irish system’s index value has improved, and the highest value since it was first included in the index in 2014.
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Ireland’s pension system includes a flat-rate basic social security scheme and a means-tested benefit for those without sufficient social insurance contributions. Voluntary occupational pension schemes and personal pension schemes provide supplementary income in retirement.
The Netherlands’ retirement income system regained the top spot on the list, with Iceland and Denmark taking second and third places respectively. Ireland scored ahead of some other European systems such as Belgium, Portugal, Germany and France, but behind Finland, Norway, Sweden and the UK.
Caitríona MacGuinness, DC and private wealth leader for Mercer in Ireland, said Ireland’s retirement income system “continues to rank highly in the CFA Global Pension Index”.
“It ranks relatively low on sustainability [24th], but strongly on integrity [10th] and adequacy [14th]. The growing use of master trusts within the Irish market should result in a further increase in our integrity score in the future due to the professionally run nature of these schemes and additional associated regulatory oversight,” she said.
Ms MacGuinness added that Government plans to introduce an automatic enrolment pension regime next year would also improve Ireland’s overall index value.
The report also highlighted the potential of artificial intelligence (AI) to improve pension and social security systems. It said that AI could assist both investment managers and individuals to make better-informed decisions, but made clear that any AI models would need strong governance and clear accountability to reduce biases and unjustified responses.
