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Thursday 28 August 2014

Government ignores proposals from own report into pensions crisis

Charlie Weston

Published 05/06/2014 | 02:30

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Joan Burton asked for study to be done
Joan Burton asked for study to be done

The Government has been accused of ignoring the recommendations of a major report by an international body commissioned last year to solve Ireland's pensions crisis.

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IFG Corporate Pensions said that the Government had failed to implement the proposals in the report, which was published by the OECD (Organisation for Economic Co-operation and Development), last May. This was despite the study being commissioned by Minister for Social Protection Joan Burton.

The key recommendation arising from the OECD was the need for Ireland to introduce a system of mandatory occupational pensions.

Ireland is one of the few countries in the OECD that does not have a mandatory system in place.

The UK has an opt-in approach, meaning that individuals have the choice to leave the system if their circumstances change, such as losing their job.

However, the OECD report on Ireland strongly recommended a mandatory system to help address this country's looming pensions crisis.

Samantha McConnell, chief investment officer with IFG Corporate Pensions, was one of the Irish experts who contributed to the OECD report. She claimed that the Government has ignored the report's findings.

"It's been one year since the report was launched, and not one of the recommendations has been implemented. This is despite the fact that there is an urgent need to address the inequality that exists between public and private pensions.

"There is also a pressing need to resolve the issue of the state pension, which will become unsustainable. We are disappointed that ultimately, nothing has happened yet."

Ms McConnell added that successive governments had sidestepped the pension issue and called on the current administration to consider the transfer of policy for pensions to an independent agency.

A spokesman for the Department of Social Protection insisted that a large number of reforms to pensions have been implemented over the last number of years.

These include changes to the state pension age and eligibility as well as reforms in relation to defined benefit occupational pensions.

"These reforms have contributed to the future sustainability and security of the pension system," the department said.

On the OECD's recommendation to bring in mandatory pensions, the spokesman said this was the aim of the Government.

"The Programme for Government includes a commitment to reforming the pension system to progressively achieve universal coverage, with particular focus on lower-paid workers," the spokesman for the Department of Social Protection said.

But the introduction of such an initiative, whether mandatory or soft mandatory, would be best supported by a more favourable economic environment than is currently the case, she added.

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