Pension In Ireland

Introduction

The main aim of a Pension is to provide income for individuals upon retirement. Pensions are becoming a growing importance in our lives as a result of our increased longevity.

In Ireland, 65-year-olds make up 11% of the population and it is believed that this will increase to 18% by 2030. Although people are living longer, they are not necessarily living healthier. One prime reason for this would be modernisation of medicine. The first formal retirement program was established in Germany in the 1880s. At the time, the life expectancy was 45 and the retirement age was 65, resulting in very few people living to retirement (Black and Skipper, 1999) . The life expectancy for men in Ireland during the mid-1800s was 40 years old (Gavin,

There has been a change in the pension qualifying age in 2011 under the Social Welfare and Pensions Act. The result of this is that the age to qualify for a pension will increase from 66 to 67 in 2021 and to 68 in 2028 (Citizens Information, 2015 ).An attracting aspect of this state pension is that it is not means tested. The result of this is that farmer’s valuable assets would not affect them when seeking this sort of pension. It allows them to keep building up their assets and they would not affect him when seeking a state pension. Another appealing aspect to this pension is that if it is their only source of income, it is not taxable. The manner in which this sort of pension works is on contributory basis. Farmers who reach pension age after 6th April 2012 will need to have 520 full-rate contributions (10 years contributions). Some of the regulations a farmer must adhere to is that they must be aged 66 or over and have adequate social insurance contributions per year; a farmer must have paid insurance before a certain age and have a certain average number of years since he first started to pay. The date the farmer first started his first job is usually the time he started to pay PRSI. For

It’s hard to ignore time value of money. Any €1 invested today will not be worth the same in 5 years’ time. That is why the state pension on its own would not be able to provide the suitable standard of living upon retirement. Also, the reality of longevity is causing many people to avail of private pensions. The state pension is backed by governments, and the ever growing cost of looking after the older generation is putting pressure on the governments in rich economies to restructure their pension system. This growing importance of pensions therefore cannot be ignored. It is staggering that in the private sector 59% have no private pensions, 25% have defined contribution and 16% have defined