A micro-macro economic analysis of pension auto-enrolment options. ESRI WP640, October 2019

Bercholz, Maxime and Bergin, Adele and Callan, Tim and Garcia Rodriguez, Abian and Keane, Claire (2019) A micro-macro economic analysis of pension auto-enrolment options. ESRI WP640, October 2019. [Working Paper]

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Abstract

Like many other countries, Ireland faces challenges in relation to the adequacy and sustainability of pensions. These challenges have been examined in detail in a series of reports (Government of Ireland, 2007; OECD, 2014; Government of Ireland, 2018a). All of these reports identify pension coverage in the private sector as a key issue. Burke and Gilhawley (2018) estimate that only 30% of the private sector in Ireland had a supplementary pension1 in 2017. As the State Contributory Pension (SCP) is paid at a flat rate, almost 70% of private sector workers are therefore set to retire without an earnings-related pension. For many of them, this will result in a sharp fall in living standards, as confirmed in our analysis. With the ageing of the Irish population, over time, pensioners will account for a greater proportion of the population and such income losses would represent a further macroeconomic risk of a fall in aggregate consumer spending (Government of Ireland, 2018a, p. 15).

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