Sunday 22 October 2017

These are dire predictions – but there are reasons for workers to be cheerful

THERE is plenty to worry about when it comes to pensions but it is not all bad news.

We have at least begun to tackle the problem by raising the working age to 68 unlike many other European countries which are cutting the age to pander to the powerful grey vote.

This sensible initiative shows that as a relatively young country we still have time to find sensible solutions such as the ones outlined in the Mercer report. Another reason to be cheerful is that those who retire will almost certainly need less money than the report assumes.

The pension industry is inclined to overestimate how much people need to retire because they want us to invest with them.

Arbitrary figures such as 10 times final salary are often bandied around but the reality is that most people need far less than this because they no longer have obligations such as mortgages and children.

A third, and less cheerful reason not to worry too much, is that demographic predictions rarely come to pass. Unfortunately, actuaries may well be too optimistic when they forecast massive increases in life expectancy.

The notion that one in five 20-year-olds will live to a 100 is a good example. Medical advances enable statisticians to make predictions like this but they are just forecasts.

New diseases resistant to antibiotics, lack of exercise, endless consumption of sugar and dangerous habits such as routine drug abuse could easily conspire to ensure that 20-year-olds enjoy shorter lives than their grandparents.

Of course it is a good idea to save. Anybody inside or outside the public sector who believes that there will be generous pensions in 20 years time needs to get real but the outlook may not be all bad; some of us will be lucky enough to work longer because we live longer while some of us will not not live as long as we hope.

Irish Independent

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