With 20,000 more people turning 65 in Ireland annually, the Government may finally have to intervene in an attempt to defuse the pension ‘time bomb’.
That’s the view of Accounting Lecturer John Maher, who chaired WIT’s organising committee for the Biennial Conference of the Association for Canadian Studies, which the institute hosted last week.
“It really is the case of striking the balance between allocating responsibility to individuals to make provision for their own retirement while at the same time recognising as a society on the whole that we’ll achieve a better result if we approach this in some sort of a collective fashion,” he told The Munster Express.
“I think it’s on the Government agenda to have some form of mandatory (pension) provision. They have introduced it in the UK, where there has been a healthy take-up and they have it also, I believe in Australia as well. I suspect that it will come in. The time to bring it in is when the economy is doing well. We are at, or close, to full employment at the moment. Not everybody is in a favourable set of circumstances but I suspect if we’re not too troubled by Brexit that we’re approaching a good time to bring in something like this.”
John Maher added: “A certain amount of wealth is created within society and we’ve got to decide how much will be allocated between labour and capital and financiers and things like that. We also have to decide how much will be allocated for consumption today and then for retirement tomorrow. And as people live longer healthier lives on average, we want to make sure that they have adequate income to make the most of those lives.”
Given that indigenous European families are considerably smaller now in comparison to the late 1970s/early 1980s (“there will be millions fewer Italians in 20 years’ time – they’re not replacing themselves”), Mr Maher pointed to the recent Swedish experience.
“If you were to look at the situation in Sweden, a county with a quite high fertility rate, one of the reasons it is at that level is due to how it opened its doors and welcomed people who were being oppressed in other parts of the world and those people often have larger family sizes than the indigenous population,” he noted.
“So I would expect for example in Germany that they will find their population increasing at a more rapid rate in the future because they have admitted a lot of people who are likely to have larger family sizes, and that’s a healthy thing for a society because young people are the people who create new ideas, develop new products and services, who advance knowledge, and we need a certain amount of that, however you’re going to get it…and I’d have confidence in the ability of Irish society to adapt to such change in the future, but it will require the full engagement by the institutions of the State, and by community groups, individuals and by educational institutions as well.”
Mr Maher was Principal Investigator of a report prepared by WIT’s Business School’s Finance Research Group which examined the provision of housing with the release of capital for retirement income.
John Maher, along with colleagues Dr Richard Burke and Dr Seán Byrne and research student Yogesh Jaiyawala undertook the project, which was funded by the European Commission’s Directorate for Employment and Social Affairs.
This work saw WIT engage with third level institutes in the UK, Italy, Germany, Hungary and The Netherlands, gathering a range of views on pension provision/retirement income in the process.
Mr Maher said that there was potential for a joint study between WIT and Canadian institutions when it came to “seeking different perspectives” regarding pension provision.