1. CURRENT PENSIONS POLICY Anne Maher 30 November, 2005 Chief Executive The Pensions Board Dublin Chamber of Commerce Business Briefing

2. 2 Agenda  Irish pension structure  Initiatives to increase private pension coverage  Some statistics  Issues  National Pensions Review  What next? 2

3. 3 Irish Pension Structure  Social Welfare pension providing either:  Old age contributory pension for those satisfying certain contribution conditions, or  Old age non-contributory pension subject to a means test for those not qualifying for contributory pension  Social Welfare pension arrangement funded on a pay-as-you- go basis supported by National Pensions Reserve Fund  Public Service pension scheme which faces greatly increased costs (also supported by National Pensions Reserve Fund)  Private Pensions on a voluntary basis arising from funded occupational pension schemes, personal pensions, Personal Retirement Savings Accounts which are tax encouraged 3

4. 4 Initiatives to Increase Private Pension Coverage  Personal Retirement Savings Accounts (PRSAs)  Mandatory Employer Access  National Pensions Awareness Campaign 4

5. 5 Some Statistics  National Pensions Reserve Fund  Contributions = 1% GNP per annum  Assets = €13.2 billion/11% GNP approximately  Payouts = 2025 – 2055  Total private pension coverage  52.4% of those at work  59.1% of those aged over 30 at work 5

6. 6 Some Statistics  Occupational pension schemes  Number = 88,069 schemes / 726,405 members  Type = 68.9% Defined Benefit membership / 31.1% Defined Contribution membership  Assets = €62.3 billion  Investment returns = 15.4% year to date / 21.2% for last 12 months / 10.1% per annum over last 10 years  Personal pensions  Number of holders = 200,000/250,000 approximately  Type = money purchase with insurance companies 6

7. 7 Some Statistics  Personal Retirement Savings Accounts (PRSAs)  Number of providers = 10  Number of products = 58  Number of contracts sold = 59,251  Assets of contracts sold = €328.929 million 7

8. 8 Some Statistics  SSIAs successful in attracting savings  1,170,208 accounts opened  Average Irish savings shortfall per annum  €6.6 billion  11% of income  €3,343 per person (Source: Quantifying the Retirement Savings Shortfall in Republic of Ireland. Report commissioned by Irish Insurance Federation April 2004) 8

9. 9 Issues  Private pension coverage – needs to increase to 70% of over 30s  Adequacy of private pension contributions – average 5% employer/5% employee contributions not enough  Funding of Defined Benefit schemes – 49% have deficiencies  EU Pensions Directive – opportunity for Ireland to be a centre for Pan-European pensions 9

10. 10 National Pensions Review  Pensions review “National Pensions Policy Initiative” (NPPI) took place 1996 – 1998  NPPI recommendations implemented 1998 – 2002  Statutory requirement for progress review by September 2006  Minister brought forward September 2006 review to 2005 (“National Pensions Review”)  National Pensions Review completed and presented to Minister on 7 November 2005 10

11. 11 What Next?  Government response to National Pensions Review?  Changes to current pensions policy?  Will Pan-European pension opportunities for Ireland develop? 11