INSTITUTE OF EUROPEAN AFFAIRS IRISH PENSION REFORM __________________________________________________________________________ ANNE MAHER Chief Executive 21 April 2004 The Pensions Board

IRISH PENSION REFORM through National Pensions Policy Initiative (NPPI) 1996-1998 finalised by Pensions Board “Securing Retirement Income” Report to Minister contained 97 recommendations __________________________________________________________________________

MAIN COMPONENTS increase in State Pension to 34% Average Industrial Earnings (AIE) to avoid poverty and provide replacement income for lower paid establishment of fund to partially fund future increases in State pension large range of changes in voluntary private pension system and in particular introduction of new flexible pensions vehicle called Personal Retirement Savings Accounts (PRSAs) mandatory employer access to PRSAs review after 3 years

IMPLEMENTED BY National Pensions Reserve Fund Act 2000 Pensions (Amendment) Act 2002

PROGRESS State pension steadily increasing (now 30 – 31% AIE approximately) National Pensions Reserve Fund up and running but with difficult investment environment Almost all recommended changes made to private system including PRSAs available since Spring 2003 with slow but steady progress Mandatory employer access in place for 59,000 employers but some still non-compliant

SOME ISSUES continuing complexity in system public confidence weakened by equity market problem slow PRSA progress excessive regulation? not as simple as planned need for full employer co-operation need for incentive or some form of boost? National Pensions Reserve Fund lack of public ‘ownership’ need to keep to clear investment mandate

IN CONCLUSION Ireland has Irish model is clear agreed plan reasonable certainty support of Partnership less complexity than most reasonable public trust Irish model is well thought of overseas good base for Pan-European opportunities