Ms Joanne Roche:

It was within our scope to consider a number of indexation measures on the pension. One suggestion was to increase the pension in line with the stated target of the national pensions framework, some 35% of national average earnings. It currently stands at 33% on our base case and will presumably continue at that rate. We also considered a scenario in which the pension would increase in line with the CPI.

Another scenario we examined is mentioned on page 83, namely, exposure to the risk of poverty. As contained in the request for tenders, the measure of the risk of poverty was the survey of income and living conditions. According to our observation, the current rate of the contributory State pension, some €11,976 per annum, is above the risk of poverty threshold of €10,831 per annum. Given that our base case assumes the pension will keep pace with earnings growth, the pension should remain above the threshold, which has been defined as 60% of median income. Section 10 contains a number of figures and tables that set out the scenarios. For example, table 10.3 provides a good example of the CPI link.

We considered uprating the pension as high as 40% of national average earnings. The relevant figures have been set out as well. As one would expect and as shown in figure 10.1, the shortfall increases significantly, particularly at the end of the period due to compound growth. In our base case, the shortfall resulting from increasing the pension to 40% of national average earnings would grow from 5.7% of GNP to 7.4% by 2066.