Sir, – How appropriate that your article on May Day (”New savings fund proposed by McGrath’, News, May 1st) should be about Ministers preparing to set aside some of the current large tax revenues for future pensioners, as well as spending some on today’s workers and pensioners.
After all, today’s workers are tomorrow’s pensioners. We all know that the costs of providing good pensions and other services for older people will rise in the future. But I, for one, am glad that so many of my generation are living longer, and that longevity will increase in the future.
Department of Finance officials reckon that of this year’s estimated ¤24 billion in corporation tax revenues, about half, or ¤12 billion, should be seen as “windfall” and not to be relied on to continue. They also reckon that even providing the present level of services for older people will cost ¤9 billion by 2030.
Last year’s budget set up a reserve fund which is now worth ¤6 billion and is capped (by legislation) at ¤8 billion.
Matt Williams: Take a deep breath and see how Sam Prendergast copes with big Fiji test
New Irish citizens: ‘I hear the racist and xenophobic slurs on the streets. Everything is blamed on immigrants’
Jack Reynor: ‘We were in two minds between eloping or going the whole hog but we got married in Wicklow with about 220 people’
‘I could have gone to California. At this rate, I probably would have raised about half a billion dollars’
So perhaps the Government might consider using that “windfall” ¤12 billion by putting ¤2 billion into the existing reserve fund for future unexpected costs that may arise, so that it stands at its current maximum of ¤8 billion (which might or might not be increased in the future); and putting the other ¤10 billion into a new pensions reserve fund, to meet the known, expected, predictable growth in the future costs of State pensions. And carry out regular actuarial reviews to check the extent to which those future costs might rise over the longer term, well beyond 2030.
Equally important: make sure that both funds invest in accordance with ESG principles (environmental, social and governance issues), as well as investing these State monies in industries like forestry, horticulture, wind energy and other industries which will enhance sustainability and ensure that we meet our climate-change commitments (and, if possible, exceed them).
Otherwise, there won’t be any need for good pensions in future.
But assuming that we all want our children, grand-children and great-grand-children – all future generations – to not only have a future, but a good future, the way these funds are invested is crucially important. The current reserve fund is invested mainly in government bonds and short-term equities. Much greater diversification is needed, to achieve future sustainability.
If this Government can also introduce a good auto-enrolment pension scheme, which takes on board the improvements suggested by the ICTU and others, so that in future all workers who don’t have a good occupational pension scheme can have a reasonably well-funded supplementary scheme to top up the State pension, then the position of tomorrow’s pensioners will have been greatly enhanced. – Yours, etc,
ROSHEEN CALLENDER,
Blackrock,
Co Dublin.