in ireland is set to increase significantly in the decades ahead. total pension expenditure by the state is set to increase from 4. 6 per cent of gdp in 2005 to 7. 9 per cent in 2030 and further to 11. 1 per cent of gdp in 2050, according to the latest department of finance estimates. as you will be aware, some pension reforms have already been adopted in ireland. the most notable has been the establishment of the national pensions reserve fund ( nprf ). in addition, the parameters of the public service occupational scheme have been adjusted, with an increase in the minimum retirement age for new entrants. while the projected pensionrelated burden represents a significant challenge, careful planning will help to counteract the long - term pressures emanating from population ageing. in this regard, the government's recently published green paper on pensions presents a range of measures that might be undertaken to address future pension expenditure pressures. the four options considered were – a gradual increase in the current social welfare pension combined with a longer working life, enhancements to the current voluntary pension system, the adoption of a soft mandatory pension savings scheme and a fully mandatory pension savings scheme. another issue worth considering is whether tax incentives or direct contributions by the exchequer, as in the ssia scheme, are the better approach. as you will also be aware, the national pensions review, published by the pensions board in 2006, provides a further set of recommendations. ireland has the advantage of starting from a healthy fiscal position, with one of the lowest debt - to - gdp ratios in the eu. furthermore, ireland's demographic profile is expected to remain favourable for some time. the country has a window of opportunity to move towards a more sustainable position. it is important, however, that considerable practical progress is made in good time in dealing with a problem, which, while not imminent, is nevertheless unavoidable and needs to be addressed sooner rather than later. there are two key issues that need to be addressed. first, measures are urgently required to bring funding into line with the cost of state pensions. without this, the long term funding gap for the state pension system that already exists will be exacerbated. second, private occupational and personal pension coverage is particularly low among lowincome workers and this must be addressed. while 800, 000 people are covered by occupational pension schemes and about eur90 billion worth of assets are under management, at present nearly half of irish workers are not

economic policy that was pursued in the second half of the 1980s resulted in imbalances, in particular, bubbles in the financial and property markets and an overvalued exchange rate. it was necessary to correct these imbalances, and this process would have been costly in any circumstances. however, these were not the only reasons why it proved difficult to gain acceptance for a low - inflation policy in sweden and why the thought of entrusting monetary policy to an independent institution raised doubts. the keynesian tradition has been extremely strong among swedish economists and across party lines ever since the 1930s. therefore, the idea that the state can continuously control or influence the economic situation has probably been more persistent here than elsewhere. our strong parliamentary tradition, which is based on the idea that all power derives from parliament, has also played a part. countries where power is shared more evenly among the political institutions have found it easier to accept the delegation of monetary policy to an independent authority. having said this, it is worthwhile recalling that there is in fact a completely different swedish tradition. the policy shift of the early 1990s is in fact a return to a long tradition of price stability that was temporarily interrupted for a few decades. between 1870 and 1970, the average rate of annual inflation was about 2 %. diagram 1. the development of inflation 1870 - 1999 inflation 1870 - 1999 percentage 12 - month change - 10 - 10 - 20 - 20 - 30 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 - 30 source : ecowin without wishing to labour this comparison, it is perhaps nevertheless worthwhile emphasizing that the 20th century was a time of unprecedented economic growth ; only japan ’ s economy grew faster than sweden ’ s. but this historical pattern came to an abrupt end in the 1970s and 1980s. price stability does not in itself create growth and economic development. these are facilitated mainly by other factors : the legal and institutional framework, the level of education, the will to invest and the availability of capital, technological development, etc. but price stability focuses attention on the rules governing the economy. those who set prices and negotiate wages do not have to worry about an erosion of future purchasing power but can expect price levels to remain stable. similarly, there is less uncertainty when it comes to savings and investments, and indeed economic decisions of any kind. furthermore, the distribution of wealth and income is less arbitrary. this was a key argument for gosta rehn, one of lo ’ s most prominent economists of all time