Significant pension reforms in the US as well as UK initiatives to funnel funds to growth mean Ireland is now in danger of falling even further behind.<\/p>\n
Elkstone\u2019s Brian Merriman said he is relatively pessimistic of action in the coming Budget but argued long-term thinking is required \u2013 including leadership from Government \u2013 or future pension provision is going to fall significantly short in Ireland.<\/p>\n
He was commenting as the Trump administration is expected to sign an order that will allow the 401(k) pension plans used by millions of ordinary American workers access investment in private markets, including private equity, real estate, infrastructure schemes and higher return forms of lending.<\/p>\n
In Britain, Work and Pensions Secretary Liz Kendall announced this week that she is reviving a pension commission to tackle what she described as a coming \u201ctsunami of pensioner poverty\u201d after her department found people due to retire from 2050 are on track to be poorer than those retiring today.<\/p>\n
Brian Merriman said there is now an expectation that returns from Irish pension savings will decline over time, if the current restrictive investing regime remains in place that in effect box most ordinary pensions savers into public investments like equities and bonds. <\/p>\n
Facilitating access to private markets would allow pension savers to benefit from higher returns, he said. Private market investments \u2013 hedge funds, private equity, venture capital investment in start-ups and private companies \u2013 have exploded in scale globally since the financial crisis of the late 2000s, while the role of traditional public assets has been in relative decline.<\/p>\n
Pension rules here have not reflected the shift, Mr Merriman said. Personal Retirement Savings Accounts (PRSA), a popular savings option, restrict investments in assets where fees may be higher or valuations are less transparent.<\/p>\n
High fees may well be justified where returns are higher, while the net return to investors should be the key consideration, Mr Merriman argues. Private capital investments are less liquid, which comes with less valuation transparency, but are suitable for long-term pension investing, he said.<\/p>\n
While high returns generally reflect higher risks, Mr Merriman said failing to open pensions to diverse investment opportunities creates its own problems.<\/p>\n
\u201cIt is riskier not to be investing in private markets,\u201d he said.<\/p>\n
A shift to facilitate Irish savers would benefit the domestic economy too, he said.<\/p>\n
\u201cThe UK is also grappling with this question of do you force people to invest in the UK economy. In Ireland we should at a minimum have it as an opt out, so you\u2019d have to make a decision not to put 5pc or 10pc of your investment into Irish investments.\u201d<\/p>\n
He cited housing and infrastructure as areas where the Irish economy needs investment and where Irish savers are not active.<\/p>\n
Pointing to the push happening in the US and UK to funnel pensions into growth opportunities he said Ireland needs to be more agile and should look to get ahead rather than just catch up with other regimes.<\/p>\n
Elkstone\u2019s investments include a string of Irish tech start-ups as well as housing and student housing schemes. It advises wealthy families and individuals on their long-term investments. Opening such schemes to ordinary pensions would allow more people to access higher returns, Mr Merriman said.<\/p>\n
\u201cRealistically this is a long-term conversation, Elkstone won\u2019t make money out of this any time soon,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"Significant pension reforms in the US as well as UK initiatives to funnel funds to growth mean Ireland…\n","protected":false},"author":2,"featured_media":22964,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,23108,186,184,185],"class_list":{"0":"post-22963","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-donal-odonovan","12":"tag-finance","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/22963","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=22963"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/22963\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/22964"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=22963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=22963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=22963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}