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Ireland
Dublin, 21 January 2010

According to Mercer, the Irish pension system ranks in the top tier based on a world-first global pension index that compares private and public pension systems from around the world and rates them on the basis of adequacy, sustainability and integrity.
  
The inaugural Melbourne Mercer Global Pension Index compares the pension systems of 11 countries, across five continents.  The Index, produced by Mercer, is the first time the world’s retirement income systems have been compared and ranked on a basis that considers a retirement income system in its entirety.
  
While Ireland was not one of the eleven countries initially included, Mercer has estimated a rating for the Irish pension system based on the methodology used in the Index report.  The Irish system has an estimated overall index value of 71, and this places Ireland in the B grade, achieved by only four countries out of the eleven in the Index report.  

"We believe that this provides a close approximation to the score that would have been attributed to Ireland had it been included with the initial eleven countries, as it was estimated based on the transparent methodology outlined in the index report", said Aisling Kennedy, Senior Consultant in Mercer.

The Netherlands obtained the top ranking in the Index with a score of 76.1 out of a maximum of 100, followed by Australia (74.0), Sweden (73.5) and Canada (73.2).  The UK system had a score of 63.9 and the USA a score of 59.8.  No country in the Index was classed as having an A-grade system (obtaining a score greater than 80), proving that even the world’s best pension models still need refinement to ensure that they are robust enough to support the world’s rapidly ageing population.

The overall index is based on results from more than 40 indicators of features that are desirable in all retirement income systems. These characteristics were grouped into adequacy, sustainability and integrity.

Ireland performs quite strongly on the integrity and adequacy sub-indices, with particular strengths in member communication, prudential regulation and the level of the State pension.

However, Ireland’s rating on the sustainability sub-index is relatively weak, suggesting that change is needed to ensure that the pension system continues to deliver in the long term.

Potential areas for improvement include:

• increasing the percentage of the workforce with private pension coverage, to help to reduce reliance on government expenditure in the future

• increasing the State pension age, to reflect improving life expectancy, while at the same time facilitating more flexible retirement patterns

• encouraging greater labour force participation at older ages, to allow retirement savings to be built up over a longer period.

According to Ms. Kennedy: “With an ageing population that will put increasing strain on already- stretched government resources, the sustainability of our pension system is a key concern.  Pensions are a long-term game, and the measures that are taken now need to be designed to counter demographic pressure that will peak many years into the future.”

The full Index report is available at: http://www.mercer.com/globalpensionindex.

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