Morning business news - February 10Monday 10 February 2014 10.41
A new report recommends all workers in the state be enrolled in a mandatory pension scheme. The recommendation comes in a position paper from the Society of Actuaries in Ireland. It notes that of the 34 developed countries which are members of the OECD only Ireland and New Zealand lack a mandatory pension scheme. Rates of pension coverage for Irish workers are low. Just 51% of workers aged between 20 and 69 have either an occupational or personal pension and when public sector workers are excluded that coverage ratio falls to 41%.
Cathal Fleming, from the Society of Actuaries, says that a mandatory pension scheme is the most effective way of getting more people on to a pension plan, while it is also the least complex method of increasing pension coverage. But he cautions that the Government needs to think carefully about such a move, adding that it could five or six years to put in place. He also advises good communication with people ahead of any initiative, adding that the Government should target a reasonably low contribution rate of about 2-3% of gross income.
Mr Fleming says that an opt-out - as operations in some countries - is very complex to administer and requires a lot more effort from the Government and the pension provider and so a mandatory scheme is much simpler. He also says that while access points to a pension scheme could operate, it should be only limited. There are five workers for every pensioner at the moment, but this is expected to reduce to two workers per pensioner by 2060, Mr Fleming states.
MORNING BRIEFS - George Soros' Quantum fund netted $5.5 billion last year, regaining top spot as the most successful hedge fund of all time. Soros first came to international fame in 1992. He earned the nickname "the man who broke the Bank of England" when Quantum made $1 billion by betting against sterling. The Quantum fund last year made a return of 22% for investors, primarily Mr Soros and his family.
*** An increase in wholesale electricity prices helped push the overall energy index, as measured by Bord Gáis, 1% higher in January. Oil and natural gas prices both fell during the month as warmer than normal temperatures in Northern Europe reduced demand. But wholesale electricity prices were up 7%. The energy index in January was, however, 1% lower than in the same month last year.
*** The annual rate at which rents are increasing nationwide hit 7% in the final quarter of 2013. The Daft.ie rental index shows the average advertised rent nationally is now €865 compared to €790 two years ago. The rate of inflation is picking up too, according to Daft. It rose to 7% from just over 2% recorded in the previous quarter. In Dublin, predictably, the rate at which rents are increasing is a lot higher at just over 11%. The average advertised rent in Dublin is now €1,210. That is €355 a month higher than the national average.
*** January marked the fifth consecutive month in which activity in the construction sector expanded. According to the Ulster Bank Purchasing Managers' index, the rate of expansion was slightly lower in the month than in December 2013. But, perhaps crucially, the rate of job creation in construction picked up in January. Expansion in both housing construction and the commercial sector was recorded while the level of civil engineering activity was lower.