A Roadmap for Pensions Reform 2018 – 2023: Reform of the State Pension
In Autumn 2018, the Department of Social Protection launched the Roadmap for Pensions Reform which contained 6 main strands of which Strands 1 is the most important for those nearing retirement age.
The reform sets a proposed target for payment of the State Pension to a level at approximately 34/35% of average earnings. It is proposed to link further increases to changes in the Consumer Price Index and to wage levels in order to ensure that the value of the State Pension is maintained.
The State Pension is premised on the principle of social rather than personal insurance and operates on a Pay as You Go (PAYG) basis meaning that today’s pensions are not funded by past contributions made by today’s pensioners but are instead funded by the taxes and social insurance contributions of today’s workers. The PAYG model works for as long as there are roughly four or more workers contributing into the Social Insurance Fund (SIF) for every pensioner drawing from it. Ireland is facing huge demographic challenges which will Continue Reading