Monday 23 October 2017

Call to change Constitution to safeguard new pension scheme

Minister for Social Protection Leo Varadkar speaking at the The Irish Congress of Trade Union conference in Dublin yesterday. Photo: Sam Boal/rollingnews.ie
Minister for Social Protection Leo Varadkar speaking at the The Irish Congress of Trade Union conference in Dublin yesterday. Photo: Sam Boal/rollingnews.ie
Charlie Weston

Charlie Weston

The Constitution may need to be amended to ensure that a new universal pension scheme is not raided by a future government.

Around one million people could be enrolled in a new scheme once it is given the green light by the Government.

But a conference on the need for a second pillar pension heard fears that such a scheme could be sequestered by the State.

The Irish Congress of Trade Unions (ICTU) conference was told it would be difficult to build trust around a new universal pension scheme given that the levy on private sector funds cost them €2.5m, a pensions levy was imposed on State employees, and public sector pensioners were hit with cuts to their payments after the economic crash.

And the National Pensions Reserve Fund was raided to bail out the banks, the conference was told.

Pensions policy officer with ICTU Fergus Whelan said it was vital that provisions were put in place to ensure funds raised from ordinary workers were not taken by the Government. "Individual pension accounts should follow you throughout your life. But they must be protected from government sequestration in the form of a levy."

And vice-chairman of the Irish Association of Pension Funds, which represents trustee, Peter Fahy, agreed with suggestions from the floor that there may be a need for a Constitutional referendum to put in place protections to ensure no government interferes with the funds raised.

Mr Fahy, who is a solicitor specialising in pensions law at Eversheds Solicitors, said trust would be an essential feature for the new scheme to succeed.

At the conference, the competency of the insurance industry to run a new universal scheme was questioned.

Mr Whelan of ICTU said there had been a complete and utter failure in relation to pensions on the part of the investment industry, the State and the pensions regulator. The new scheme should see a national superannuation fund set up, with the scheme administered by the State. Funds should be invested by the National Treasury Management Agency, with some of the money farmed out to investment firms.

There should be an emphasis on some of the money being used to fund State infrastructural investment, Mr Whelan said.

Kevin Thompson, of Insurance Ireland, which represents pensions firms, said the advice it had received from seminars it was running on a new universal scheme was to "keep the Government at arm's length".

Investment firms favour a system where employers deduct the pension contributions and employees get to choose which fund it is invested in from those of existing pension providers that meet certain criteria.

Tony Donohoe of employer body Ibec said employers were in favour of a universal scheme.

Minister for Social Protection Leco Varadkar said the State pension would continue to be the "bedrock of the Irish pensions system".

Irish workers 'sleepwalking into retirement': p46-47

Irish Independent

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