The only way to tackle poverty among older people is to index-link the State pension to the average industrial wage, writes Eamon Timmins
How are you planning to spend your retirement? Playing golf or spending more time holidaying abroad? Or how about rationing your food on a tight budget and praying you will have enough money to pay the gas bill when it lands on your doormat?
Despite the general impression that everyone in the State is doing well, for thousands of older people dependent solely on the State pension, only their expert money management skills are keeping body and soul together.
One in five pensioners (90,000 people) is at risk of poverty and struggles to make ends meet. Of these, 17,000 experience grinding poverty, unable to afford meat or fish every second day, or a second pair of shoes or a winter overcoat.
These are our State pensioners. Those on the State (Non-Contributory) pension receive €200 a week - €3.55 under the poverty line. State (Contributory) pensioners get €209.30.
The fact that so many of our pensioners are experiencing poverty should come as no surprise. The Government's social spending is among the lowest in Europe. We spend approximately 3 per cent of GDP on old-age protection, compared to 11 per cent in the UK.
For the OECD as a whole, for people who have spent a full career on average earnings, the average gross replacement rate of earnings provided by a pension is 57 per cent of pre-retirement earnings.
However, Ireland's State pension is not earnings-related and its replacement rate is the lowest in the OECD at 33 per cent of average earnings.
In a nutshell, if you plan retiring and depending on the State pension, prepare for a life of poverty. Some four out of 10 members of the Irish workforce over 30 may find themselves in that boat, as they currently do not have a pension.
For those still working, there are options. However, Age Action believes the only way to tackle poverty among the current generation of older people is to index-link the State pension to the average industrial wage.
We believe it must be increased to 50 per cent of the average industrial wage by 2016.
Index-linking of the State pension is part of the "Older and Bolder" campaign currently under way.
Backed by five organisations working with older people, it aims to put older people's issues on the political agenda for the general election.
The current practice of tinkering with pension payments from one budget to the next has failed to eradicate pensioner poverty. Setting five-year targets for pension levels has also proved unsuccessful. The Government set a €200 target in 2002 which sounded good at the time. Five years later, that figure has been reached and pensioners are still under the poverty line.
The PDs have set a €300 target for the next government, if re-elected. Again that sounds generous. However, if the current €200 were to be increased by just 3.6 per cent per annum (for inflation) over the next five years it would be worth €247 in 2012.
Therefore, in real terms, the PD target would be to increase the lowest State pension by just €10 per annum over the lifetime of the next administration.
The level of the State pension also ignores the real cost of living. Research by the Vincentian Partnership for Justice looked at the true cost of sustainable living and compared it to the social welfare payments received in the case of a widow (over 70) and a pensioner couple (aged 66-69) on a non-contributory pension.
The shortfall between what was needed to live with dignity and the payments received ranged from €46.60 to €89.65 for the widow and €9.24 to €62.21 for the couple.
For these people, these shortfalls mean the weekly choice between food or heat, or maybe being unable to save a few euro for a grandchild's present.
There is considerable speculation about the contents of the Government's Green Paper on pensions, due to published before the end of this month.
It will look at options open to the Government to begin planning for the provision for slowing increasing numbers of pensioners in the years to come.
Age Action believes it should include the banning of mandatory retirement so that those who wish to work beyond 65 and are capable of doing so, can do so.
Such workers should be allowed contribute to their State pension beyond 65, with associated higher returns for those who take this option.
However, the issue of the current level of the State pension must be addressed if the Government is serious about tackling poverty among pensioners.
Eamon Timmins is Head of Advocacy and Communications at Age Action. Details of the Older and Bolder campaign are available at www.olderandbolder.ie