Pensions and the need for clear vision
Sir, – The new Commission on Pensions, despite its limited brief, must look further than the question of the state pension, the age at which it is paid, the eligibility criteria, the real cost (not just the gross), the demographic picture and other related issues.
As Michael Somers, the former chief executive of the National Treasury Management Agency says, the “real elephant in the room” is the huge cost which has already built up in relation to both public sector pensions and social welfare pension entitlements, both contributory and non-contributory; and the absence of funding for this (“We continue to ignore massive pensions elephant in the room”, Business Opinion, November 23rd).
He describes some of the reasons and context for the establishment of the National Pensions Reserve Fund (NPRF) in 2000, following two separate reports on public service pensions and social insurance pensions; mentions that by law no money was supposed to be taken out of the fund until 2025; but that “the law was changed” in 2009 ” . . . to invest in the two major Irish banks”. He concludes by expressing the hope that the NPRF could now be reconstituted, but doubts if the necessary vision and conviction to do so exist.
I’m afraid I would be less polite and diplomatic about the way the NPRF was raided to save the banks; how it was then abolished and the remains transferred into the Strategic Investment Fund; how the small remains of the SIF were later watered down into the rainy day fund; and how none of this fund, initially well-costed and earmarked for pensions alone, has ever gone back to future pensioners, as intended.
But I would also be less pessimistic about the prospect of re-establishing the NPRF. Surely now is the ideal time, when money is so cheap and when the banks are actually charging people for looking after their money? The State could easily borrow enough to make a good start; and many individuals and investors might be prepared to invest their savings in a fund which could give a safe return, however low initially, And such a fund, if well managed, could invest in sustainable, socially responsible, environmentally friendly initiatives, yielding the good long-term returns needed to fund pensions in future. – Yours, etc,
ROSHEEN CALLENDER ,