The private pension system had failed and a new approach was needed which would be State-led rather than market-led, Paula Clancy, director of the independent think tank Tasc, has said.

She was responding to Minister for Social and Family Affairs Mary Hanafin's comment in The Irish Times yesterday that persons at retirement age who deferred the purchase of an annuity until the markets improved could rely on the State pension in the meantime.

Ms Clancy said this statement, "represents a tacit acknowledgment that the private pension system has failed, and that the social welfare pension is the only reliable component of our pension system. This acknowledgment should inform a new approach to pension provision, which should be State-led rather than market-led," she added.

In collaboration with the TCD Pension Policy Research Group, Tasc recently published a set of proposals aimed at reforming the pension system by increasing and universalising the State pension, and introducing a social insurance earnings-related pension.

"For years, workers have been told that the best way of providing for their future is to invest, through a private pension fund in the equities market.  They have been sold this line by successive governments, the Pensions Board and by the private pensions industry," she said.