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Servicing the pensionati Back  
Ireland could develop a role as a leader in pension provision for other EU countries if it takes action now, according to a preliminary report issued by the Financial Services Industry Association (FSIA). The report studies pension traditions in the EU and some other parts of the world and concludes that Ireland is well placed to take advantage of emerging opportunities, particularly in Italy, Spain, Germany and France.

Using the 'pillar' analogy, the report says that pension arrangements vary greatly from country to country, particularly in the balance between first pillar (social security schemes) and second pillar (supplementary arrangements) provision. Currently, most countries are making changes to their first pillar systems and many are also trying to develop provision via their second pillar. This could produce substantial commercial opportunities in areas where Ireland already has much experience. In particular, the report identifies three broad openings. Firstly, it says that whole new areas of pension coverage should open up as governments decide how to deal with the long term financing problems of their current structures. A stark example of this can be found in Italy's so-called 'baby' pensioners who, at a relatively young age, retire on comfortable first pillar arrangements. This system is no longer viable in an Italy where the age pyramid is inverting due to a remarkably low birth rate. Thus, Italians are being forced to look seriously at private funds; Italy's problem could become Ireland's opportunity.

According to the FSIA's 'back of the envelope calculations', if Italy, Germany, France and Spain were to develop their second pillar provision to the extent where external assets would reach even half of the level as a percentage of GDP that exists in Ireland today, this would result in assets of IRĀ£1 trillion.

The second opening, according to the report, is linked to this. It says that if 'certain barriers were removed, especially relating to investments, there may be new opportunities to provide services from Ireland to existing schemes in other countries'. On this question, the FSIA claims that Ireland's Government and industry should lobby at EU level for changes in pension rules.
Thirdly, says the study, Ireland could encourage other 'services' needed by existing pension funds to relocate to Ireland, 'such as multinationals centralising their pensions administration function'.

A follow up to the FSIA study is currently being considered by the IFSC Clearing House Group, IDA Ireland and the FSIA.

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