How does our old-age pension system compare to other countries?

Are our expectations of what the state provides (or should provide) in terms of old-age pensions too high in comparison to other countries? We’ve examined this issue from two different perspectives: First of all we look at some figures that compared “pensioner poverty” levels in different countries. The second perspective is how much we have to pay while we’re working, to actually qualify for an old-age pension.


Poor pensioners or golden oldies?

How do the over 65’s in Ireland compare to other countries? A measure that is used to compare the wealth of pensioners in different countries is to look at the percentage of over 65’s who have an income that is below half of the national median household income. These people are considered to be living in pensioner poverty.

This research found that on average 12.6% of pensioners in OECD countries are living in income poverty. The graph below shows that the Netherlands is the best place to be a pensioner – only 2% of their pensioners live in income poverty. At the other end of the scale, you don’t want to be retired in South Korea, where half of all pensioners live in poverty.

Ireland fares pretty well on this measure, with less that 7% of pensioners living in income poverty, placing us as a strong performer. This is far better than the UK at over 13%, and a good number of our European partners.

So, a good starting point!



But what’s the cost?

This is maybe where reality bites a little… We also looked at OECD figures that show how many years you have to contribute towards your old-age state pension (through PRSI in Ireland) in order to qualify for the maximum available old-age pension. And guess what? Ireland is top of the charts here – with workers having to contribute an average of 48 contributions per year for 43 years to qualify for the maximum old-age pension entitlement! In the UK, you have to contribute for 35 years, in Australia for 10 years only.

Now it has to be said that the old-age pension amounts in Ireland are actually quite generous. Currently the state pension is €233.30 per week in Ireland as compared to the equivalent of €197 in the UK.

The question of course though is – can we afford these levels of old-age pensions?

In Ireland you also need a minimum of 10 year’s contributions to qualify for any contributory old-age pension at all. Of course if you don’t have this, you might qualify for a means tested old age pension.


So where does this leave us now?

Well with the huge economic challenges being faced by the state, we’re certainly not going to see any reduction in the number of years you need to contribute to PRSI, in order to get a full state old-age pension. We can probably also expect to see a reduction in the amount of old-age pension payable – Ireland just can’t afford to be near the top of the class here! But this will take lots of political courage…

What we are more likely to see is gradual, further increases in the qualifying age for the old-age pension and greater incentives to help people financially plan for their retirement themselves. This is likely to include an element of mandatory private pensions for all workers in the future.


We’re constantly tuned into this changing landscape on your behalf. We’ll monitor the impacts that any changes in state old-age pensions will have on your own retirement plan, and will help you alter your plan accordingly. At the end of the day, our goal is the same as yours – to help you live the life you want to live when you retire.