IRELAND - The Social Insurance Fund will accumulate a €35bn deficit by 2061 if current regulatory frameworks on retirement age and contribution rates are maintained, Mercer's most recent actuarial valuation of the fund has found.
Income to the fund which holds all social insurance contributions to the first pillar pay as you go system is projected to equal or exceed benefit outflow up to 2010.
Over the following six years from that date the surplus in the fund - which stood at €3bn at the end of 2006 - will be exhausted and will turn into a deficit from 2016, Mercer noted.
In the pensions green paper issued earlier this month, the government suggested introducing incentives for people to work longer together with an increase in the statutory retirement age.
However, it does not recommend the introduction of a mandatory second pillar which it is believed could help increase people's pension benefits.
"A balance will need to be achieved between maintaining the stability of the Social Welfare pension system, supporting the voluntary nature of occupational pension provision and intergenerational fairness," the green paper states.
Furthermore, it is noted current contribution rates are projected to be adequate to meet outgoings from the fund only until 2010.
An increase of 74% in contribution rates would be required to meet benefit payments over the entire projection period.
Assets from the National Pension Reserve Fund, created in 2000 to support the social welfare and public service pensions from 2025, will ease the deficit but will fall far short of the projected 2050 pension liability of 15% of GNP, the government noted in its green paper.
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