Last week saw good news for the pensions industry - and anyone contributing to a pension - with the budget announcement that the pensions levy is on the way out. However, even in its absence the pensions industry here is in difficulty. The latest Melbourne Mercer Global Pension Index calls the sustainability of the state pension system here into serious question.
Niall O'Callaghan, Head of DC Pensions with Mercer, said the state system performed very well on an adequacy footing, coming in second on the league table. "However, that hides an underlying story on the sustainability of the system. That means we are building up liabilities and promises to people within the state and within public sector pensions which are unsustainable," he said.
Mr O'Callaghan said one of the biggest concerns highlighted was that we do not fund our state system, except through the private system where it is only 50% coverage. "The suggestion is to broaden the level of coverage in private. That means putting in place an auto-enroll or a mandatory system which is in place in Denmark, Australia and the Netherlands." He said the Government had already taken some steps in that direction as it had not increased the state pension in recent years and it pushed the retirement age out to 68 gradually. "We think they're going to push that out even further. Effectively the state pension will not be increased for a while or the age at which you get it will be further pushed out," he concluded.
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MORNING BRIEFS - Home Retail, Britain's biggest household goods retailer and the parent group of Argos, posted a 13% rise in underlying first half profit on the back of good sales growth at both its Argos and Homebase chains. The group said today it made profit before tax and one off items of £30.9m in the six months to August 30.
*** NAMA is looking at shutting up shop in the next three years. In a policy statement accompanying its results for the first half of 2014, the asset management agency said it is now on course to complete much of its business by the end of 2017 or mid-2018. It had been looking at the end of 2018 but the improvement in the property market has seen it step up its activity in recent times and offload a number of significant portfolios. The agency made a profit of €102m for the six month period - nearly double the €55m recorded at the same time last year.
*** The Government looks like it might press ahead with a mortgage insurance scheme for first time buyers. The Taoiseach, who is addressing a construction conference this morning, says he will ask the Finance Committee to take a look at the experiences in other countries such as Canada and the UK. Under such schemes, a portion of mortgages to first-time buyers is guaranteed by the State or private insurers, in order to free up more money for lending by the banks. It comes as the Central Bank introduces new regulations on lending including a mandatory 20% deposit on home purchases.
*** Yahoo has reported profits of $6.8 billion for the three months to September. The results however were inflated by $6 billion in earnings from the sale of its stake in Chinese e-commerce giant, Alibaba, which it was required to offload as part of its floatation. That made up for a continuing fall in advertising sales at Yahoo. Revenue from ads fell by 5%. But overall revenues were up by 1% to $1.15 billion. Despite the Alibaba effect, the numbers were better than expected which sent shares higher on the close last night.
*** Consumers are hitting the high streets again, the latest sales review from Retail Excellence Ireland indicates. Quarter three was the first in seven years in which three consecutive months of growth was recorded. Furniture and home appliances as well as garden merchandise recorded good gains, the review shows. Pharmacy sales, footwear and IT experienced declines with REI predicting further store closures in the pharmacy sector.
