I am delighted to be here this afternoon to officially open Hewitt Associates Ltd new offices in Iveagh Court. This move is a clear statement of ambition and intent. Furthermore, it highlights the pace and scale of change that Hewitt have undergone in this country over the past number of years. Indeed, when I received the invitation some weeks ago to speak at this event, your company was known as Hewitt and Becketts.
As Hewitt Associates Ltd you represent the coming together of three firms. In a sense therefore, the company is both highly experienced, yet new. As an acknowledged market leader in the provision of financial services, such as pension and investment advice, you are poised to achieve new synergies and economies of scale. I certainly wish you continued success and growth.
The Economy
All of these changes occur at a good time for the Irish economy. The growth forecast is positive and we have many reasons to be optimistic for the future. For both this year and next, it is estimated that real GDP will grow by at least 5%. Inflationary pressures, which were a source of particular concern up to two years ago, have eased markedly. The rate today, at only 2.2%, is very close to the Eurozone and EU average. This represents a steady improvement on the position at the end of last year when, for example, the headline rate stood at 2.9% in November 2004.
There is continuing good news too on the labour market front; indeed extremely good news – a 3.1% expansion last year in the numbers at work - the highest annual increase since 2001. This is combined with the lowest unemployment rate in the EU – 4.2% last month, which is less than half the EU average. And while regrettably, there will always be some job losses, the Irish economy is in the enviable position of virtual full employment.
Over a few short years – indeed since 1997 – Ireland has been radically transformed. Living standards then, as measured in terms of GDP per capita, were significantly below the EU average; now they are 23% above the general EU15 level, putting Ireland among the top four countries in the world. I find great encouragement in indicators of this kind, especially because they point to much greater financial security and confidence for tens of thousands of households and families.
Overwhelmingly, the change of recent years has been for the better, notwithstanding that as a society, we have still some considerable distance to go on a number of quality of life issues. That said, huge progress has been made over a very short timeframe.
Pensions Issues
One issue of concern today is pensions. Over recent years, pension issues and the pensions industry have gained an increasingly high profile at home and around the world.
The Government is particularly aware of the importance of ensuring that there will be adequate retirement provisions for everyone. We are fortunate to have the youngest population in Europe, which gives us more time than most other countries to make sure that we have a sound and sustainable pensions system that will deliver as the population ages. Recent years have seen considerable improvements in mortality, which is, of course, very good news. This heightens the focus on pension provision in terms of coverage, but also in terms of cost – longer life, higher cost!
My colleague, the Minister for Social and Family Affairs, Seamus Brennan recently asked the Pensions Board to undertake a full review of our pensions system. It will involve an examination of whether the present system is likely to deliver the necessary benefits and, if not, what other models might be more effective. This review is to be completed during the summer.
Another major recent pensions development is the first EU Pensions Directive.
This has to be transposed into the national law systems of all Member States by 23 September this year. The Directive sets a framework for the prudential supervision of pensions and also puts in place a framework for pan-European pensions.
Ireland has made good progress on implementation and the necessary legislative changes have been made through the Social Welfare and Pensions Act 2005. The legislation maintains the trust-based framework for pension schemes. At the same time, the Minister for Social and Family Affairs has made clear that we are open to discussions with any cross border pension arrangement, interested in locating in Ireland, and wishing to use a different form of legal structure.
The recent Finance Act also contains complementary provisions, which extend the right to tax deductions for pension contributions to any pension arrangement established in another EU Member State. These tax changes bring Ireland into line with the EU’s requirements to eliminate tax discrimination favouring nationally-based pension schemes.
Such progress, together with recent developments on the investment side, such as the introduction of the Common Contractual Fund, has made Ireland an attractive location for pan-European pensions. A Task Force, set up by my own Department, is monitoring the opportunities.
Whilst it may be some time before full pan-European pension schemes emerge, all of the measures taken in Ireland should put us in a strong position to compete as the market develops.
The recent IDA commissioned Deloitte study on the Future of the International Financial Services Sector in Ireland identified pensions as a growth area for the future. It is encouraging to see companies such as Hewitts responding to that environment and developing and expanding its operations.
Conclusion
To conclude, I wish Hewitt Associates Ltd every success in these new premises and the very best for the future.
Thank you.
ENDS