Reality of pension fiasco is we will all work longer

WHEN the US all too belatedly woke up to its retirement crisis it was ruefully acknowledged that it was not because of a lack of money, but a lack of vision. In Ireland there is evidently a lack of both. This was brought home sharply by figures that showed startling shortfalls in the State’s largest pension schemes. This despite seeing another €10bn pumped into such pensions in the last six years, and sparkling returns on the stock market.

Only the public sector appears to be insulated from the headwinds.

It all adds up to a pretty bleak outlook for the private sector and indeed for those in the semi-State sector schemes.

The downside to longevity is that once-prized defined benefit schemes are now struggling to meet ever-elastic demands.

Strict accounting rules require costs to be in line with bond yields. The yield is what a bond actually earns.

But with rates at record lows very little is accruing and therein lies the rub.

All this suggests that people will simply need to work for longer. These figures can no longer be ignored. Day dreaming into the future or without preparation, and expecting to arrive at a serene location as we age, is reckless. There is no quick fix for years of neglect, but the Government knows the tipping point is not far off.