Demographic changes help improve pensions outlook

Ireland's pensions timebomb is defusing due to the influx of foreign workers and a slightly rising birth rate, an Oireachtas committee was told yesterday.

Pensions ombudsman Paul Kenny told the Oireachtas Joint Committee on Social and Family Affairs that the demographic changes might put back from 2025 the time the Government would need to access the National Pensions Reserve Fund.

However, he said the fund would ultimately be required and disagreed with Labour TD Derek McDowell, who suggested reducing the 1 per cent of GNP paid into the fund, established by former minister for finance Charlie McCreevy to help fund State pensions beyond 2025.

"Why should we be taking about €1.5 billion out of taxpayers' money and invest in stock markets while we ask our parents to live in poverty," Mr McDowell inquired.

The committee met on the same day the Cabinet discussed recommendations set down in the national review of pensions policy. The review is due to be published this week.

The Pensions Board, the Irish Association of Pension Funds (IAPF) and officials from the departments of finance and social and family affairs also addressed the committee.

The IAPF said increased caution in investment by pension funds concerned about rigorous solvency rules was costing consumers about 30 per cent of potential gains.

IAPF vice-chairman Patrick Byrne warned the committee that the recently completed review was "pretty much the last chance to intervene in support of defined-benefit pension schemes".

Fine Gael's Senator Sheila Terry said that, in the absence of pension income guarantees, the exhortations of the Pensions Board to increase supplementary pension coverage was "almost robbery". She said the 900,000 members of the workforce without supplementary pension provision had "at least not given away their money for others to misuse it".