Ireland is ranked 11th out of 25 countries in the 2015 Melbourne Mercer Global Pension Index (MMGPI) for the second year, with the reliance on the State pension seen as a key weakness. The report ranks the sustainability of this system in just 20th position.

Ireland is heavily reliant on the State pension which is provided on a “pay-as-you-go” basis. This means that funding is not set aside in advance and benefits are paid from PRSI contributions made by the current workforce.

Given future expected improvements in life expectancy and our current economic status, it is clear that steps to reduce reliance on the State pension are required, according to Mercer. According to Mairéad O’Mahony, DC (defined contributions) leader for Mercer Ireland, “this report highlights the importance of measures that aim to improve the sustainability of our pension system, whether that means adjusting the State pension age, increasing participation in pension schemes amongst our workforce, or funding additional contributions for future retirement income”.

She said simplifying the regulations surrounding the pension industry would be a key step.

The MMGPI is the world’s most comprehensive comparison of pension systems, covering close to 60 per cent of the world’s population.