Thursday 29 September 2016

Pensions 'won't keep pace with inflation' under SF

Jane O'Faherty

Published 25/02/2016 | 02:30

Prof John FitzGerald: analysed financial plans of the parties Photo: Tom Burke
Prof John FitzGerald: analysed financial plans of the parties Photo: Tom Burke

Sinn Féin have not allocated enough money in their election promises to keep State pensions rising with inflation, a leading economist has warned.

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The revelation is the second blow to the party's policies on pension provision.

Professor John FitzGerald, Adjunct Professor in Economics at Trinity College Dublin, said Sinn Féin had put in significantly less funds than their rivals in their election manifesto to cover the rising cost of pensions.

Prof FitzGerald said an allocation of €2bn would be needed to "keep the real value of welfare payments unchanged", adding prices are set to rise over the next five years.

He said the Labour Party "came close" to the need with a promise of €1.7bn, followed by Fine Gael with €1.4bn.

"Fianna Fáil don't give numbers, but it looks to me that they are around the Fine Gael numbers," he added.

Commitments

"Sinn Féin have put in a much smaller amount - €900m," on Newstalk's 'Breakfast with Ivan and Chris'. "But they have a lot of commitments that have come out of it."

"It looks to me as they haven't provided a significant amount to raise pensions, child benefit and so on," he said.

Prof FitzGerald said the party wouldn't have sufficient means to keep welfare payments level.

But he pointed out that Gerry Adams's party had made "specific provisions on disability".

Prof FitzGerald also stated that none of the four manifestos indicated how State pensions would be paid when current workers in their 30s retire.

He also highlighted that two of the parties - Fianna Fáil and Labour - had promised to cut student fees, while Sinn Féin pledged to abolish them completely.

However, he said Sinn Féin have not shown how they will improve quality at third-level.

"Three of the parties, Fianna Fáil, Labour and Fine Gael, have roughly €100m to pay for the fact that there are going to be a lot more students and try and do a small amount to improve quality," he said.

"[With] Sinn Féin, there's no obvious provision in their manifesto," he added.

"In order to preserve the quality of third-level education for those who go there, one option - which no party is suggesting - is to restrict the number of students," he continued.

"If you don't do that and want to build quality, then you have to put in the resources."

However, Prof FitzGerald said the commitment to third-level across all four manifestos was very limited compared to allocations for the rest of the education system.

Last week, it emerged Sinn Féin plans to financially hammer prudent middle-income earners who are investing in a pension.

Mr Adams's party wants to massively reduce the tax relief on private pensions at a time when experts are warning of a looming crisis because not enough people are saving for their retirement.

An average worker on an income of €40,000 who pays 10pc into a pension pot could lose out on as much as €800 annually as a result of the move.

Finance Minister Michael Noonan said: "That's a very nasty little one that Gerry Adams has slipped in."

Under pressure, Mr Adams insisted "most people" can't avail of the relief because they can't afford "the big accountants".

However, experts told the Irish Independent that the vast majority of middle-income workers would be claiming the relief if they were paying into a pension.

Mr Noonan said: "What that means is the doctor, the nurse or the guard, or the private sector worker paying 10pc into a pension contribution on €40,000, that'll cost you €800 a year. It's the equivalent of a 2pc reduction in your gross wages.

"That's a long way away from people on €100,000."

Irish Independent

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