Retirement age will have to rise, expert warns

People will have to accept the need to work longer in order to finance their retirement, a conference in Dublin heard yesterday.

The chairman of the European Federation for Retirement Provision, Mr Alan Pickering, said increasing savings alone would not be enough to address the fact that people are living longer.

"We cannot save our way through the demographic challenge," he said. "It really is a mixture of working longer and saving more."

Speaking at the annual UK & Irish Pensions and Investing Summit, he said: "Most of us now have much longer to live. It does not make sense for people to expect to work from 25 to 55 and then live the life of Riley until 95.

"What has been happening in recent years is that we have been trying to stretch retirement at both ends - living longer and retiring earlier - and you don't need to be Einstein to know that that cannot work. You simply cannot save enough in a 30-year working career to keep going for 30 or 40 years of retirement."

He said increasing the retirement age might also be desirable from an economic viewpoint.

"Throwing a valuable resource such as experienced and healthy people in their prime onto the scrapheap of compulsory retirement is not the best way for Ireland to continue its enviable record as the fastest growing economy in Europe," he said.

He stressed that retirement savings needed to be more user friendly but, in comments that run counter to industry consensus, advised young people to avoid pension investment unless their employers were also contributing.

He said the first thing young workers whose employers are not contributing to pension schemes should do was pay off debt. They should then ensure they have adequate bank reserves to stave off future debt and enough medium-term savings to meet large cash needs as they arise. Only then should they look at pension savings.

Mr Pickering also argued against compulsion - a threat hanging over the Irish pension system when a review of the PRSA scheme takes place in 2006. "I do not see what public policy goal can be filled by compulsion," he said.

"If it is removing absolute poverty in old age, the State can do that. If it does that, what right has it got to compel me to save at all?"

The conference also heard from the Irish Association of Pension Funds chairman, Mr Gerry Ryan, that many Irish people should be doubling their savings in defined-contribution schemes.

SIPTU's national equality secretary, Ms Rosheen Callender, told delegates the Government needed to take radical action on pensions in the coming Budget.

She urged the introduction of a pension tax credit to encourage the low-paid to put money aside.