In economics, austerity is a policy of deficit-cutting, lower spending and a reduction in the amount of benefits and public services provided. Austerity measures are typically taken if there is a threat that a government cannot honour its debt liabilities.

Ireland was running a comfortable budget surplus before the financial crisis hit however the consequence of weak financial regulation and the government's too-generous bank bailout has placed us in the economic position we find ourselves today. We might have coined the mantle "best little bailed out country" in Europe but at what cost?

The National Pension Reserve Fund has been dessimated by the governments vigour to recapitalise the banks, so much so that Goodbody economist Dermot O'Leary said that such had been the pressure on the fund that it should be renamed the National Banking Bailout Fund.

This in itself will now place a huge emphasis on private pension funding by individuals to make sure that they have sufficient personal wealth to provide for their retirement because the State Pension will NOT be there for most of us! Never mind about trying to bridge the GAP to make up the shortfall between the State Pension and the retirement income required, it's now all hands to the pump just to have sufficient retirement income to retire on! 

REMEMBER the Social Welfare and Pension Bill 2011 changed the dynamic of the State Pension for us all; from 2014 there will be a standard State Pension age of 66 years for all. By 2021 the qualifying age for the State Pension will rise from 66 years to 67 years and to 68 years from 2028 (that's only 17 years time...frightening!)

This will all be pie in the sky if in fact the National Pension Reserve Fund is now close to zero.

Who knows what the next budget is going to bring! 

Check out our Pensions page for more info or call Alasdair on 01 810 1912 or email info@agsfinancial.ie