Official pensions policy in Ireland may be on the wrong track, according to former Irish Taoiseach Garret Fitzgerald.

He told the recent annual conference of the Irish Association of Pension Funds: There has been a reversal of an earlier negative trend in Irish economic dependency." A recent study has shown that the ratio of dependents to workers, which had risen to 2.29 in 1986 will fall to 1.70 next year and to 1.55 by 2006. Fitzgerald thinks this figure is "a good deal too cautious".

Without any increase in Irish output, this change would mean average material living standards would jump by some 50%, he said. But Ireland's GNP growth rate over the past five years has been almost four percentage points higher than the rest of the EU. This has been accompanied by increasing employment, as "growth is now yielding higher returns in the form of jobs than was formerly the case". In addition, it looked as if there could be net immigration to Ireland, instead of emigration. Fitzgerald said the combined impact of all these factors was that the capacity of the economy to handle the problem of age dependency was going to be far greater than was previously believed.

The study, conducted by two economists from the Economic & Social Research Institute for the Combat Poverty Agency, concluded that the National Pensions Board forecasts of population and labour force trends was over-pessimistic, said Fitzgerald. "This contests the relevance of its actuarial approach to the sustainabilty of social welfare pensions." More benign scenarios were plausible. "This would mean that, contrary to the position elsewhere in Europe, increases in the number of pensioners would not be such as greatly to pressurise our social welfare system.""