PensionsThe proposal to introduce individual retirement accounts to solve the pensions crisis offers poor value for savers, a new paper claims.

Dr Shane Whelan, an actuary in the UCD school of mathematical sciences, said proposals for mandatory savings accounts contained in the National Pensions Review would produce pensions that are 20 per cent lower than the pay-as-you-go State pension system for the same level of contributions.

The paper, Valuing Ireland's Pension System, which was published by the Economic and Social Research Institute today, said the costing of alternative pensions models presented by the Pensions Board concealed the impact of administration charges on pension funds. "By ignoring investment risk and its consequences, the cost and value of pensions are materially understated," Dr Whelan writes.

Dr Whelan recommends that the current State pension be explicitly index-linked to average wage increases and structured like a financial contract, with the discretion of politicians to control the rate of payment removed.

Pensions have been the subject of several Government-commissioned reports in the past two years and a Green Paper has been prepared. But no decision has yet been taken on how best to improve pensions provision in the Republic.

"It seems we have never been better-informed on pensions issues, nor so much confused," Dr Whelan said.

The Government target that workers should have a pension equivalent to half of their salaries is unrealistic, he added.