Sunday 17 December 2017

Pensioners do better here – OECD report

Charlie Weston Personal Finance Editor

PENSIONERS in this country fare better than older people in other countries, a major report on pensions has found.

And people with a pension from the public sector are getting an average of 40pc more than private sector retirees, the Organisation for Economic Co-operation and Development (OECD) found.

The disposable income for older people “increased consistently” from 1995 to 2009, a time when the State pension went up by €138 a week.

And poverty rates among older people have come down dramatically.

“The economic situation of pensioners in Ireland is comparatively good, both with respect to other age groups in the population and in international comparisons,” the report says.

The OECD report for the Government urges a radical shake-up of the state pension with a new universal basic pension scheme for all financed by taxes and contributions.

Commissioned by Social Protection Minister Joan Burton, the OECD report also calls for a compulsory pension scheme for the one million private sector workers with no occupational or personal pension.

It said a mandatory scheme would be “less costly and most effective approach”.

But it has disadvantages. It may be “politically difficult in Ireland because it may be perceived as another tax and as a new burden on employers in the form of contributions to employees’ pension funds”.

The authors of the report favour the Australian model where employee contributions are set to rise to 12pc of wages, and employers are to contribute 9pc of salary.

The report also says the household benefit package and free travel scheme could be converted into a cash supplement and merged with the basic pension.

The household benefits package means pensioners get €35 a month towards energy costs, €9.50 a month for telephone bills, and no charge for a TV licence.

Alternatively, the package could be awarded only to pensioners who need the benefit as “a means-tested cash supplement”.

The report also proposes a single means-tested state pension, financed out of general revenue as an alternative to the universal basic pension.

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