Ireland's two-tier pension system goes with a two-tier health service
All reports lament the unequal coverage rate but manage to ignore the elephant in the room, writes Colm McCarthy
Ireland has long had a two-tier pension system to go with the two-tier health service. Some groups of employees are covered by decent occupational pension arrangements but many are not. Those who work in favoured sectors of the economy are fortunate, notably permanent employees in banks and in the public service, but there are very wide variations and many workers in the broader economy have little or no entitlement to income from an occupational scheme.
Individual pension entitlements are not the only sources of living expenses when older people withdraw from economic activity. Income in retirement comes from other sources too: there is a flat-rate contributory pension available to all who have an adequate record of PRSI contributions and a means-tested scheme is available to everyone over 66 even if they lack the required record. Owner-occupiers with mortgages paid down get to live rent-free, so paying off the mortgage is a form of retirement saving. Those in social housing pay low rents and enjoy security of tenure in old age. Farmers and small business owners expect to have assets to realise when the time comes to pack in doing paid work. But the State pensions are modest, not everyone has a farm or business to sell and access to additional retirement income from occupational pensions is necessary to maintain living standards for most in the labour force. Personal pension savings are not evenly available under current Irish arrangements, and the situation has worsened over the period since the financial crash.
The Quarterly National Household Survey from the Central Statistics Office, one of the best sources of data on economic and social trends, released last week its first survey on pension coverage since 2009. The figures reveal a huge disparity in pension coverage across the economy.