Universal pension system will take time, says Varadkar
Published 21/11/2016 | 02:30
A universal pension system - whereby workers are automatically signed up to a workplace scheme - is a priority, but will take time to "get right", Social Protection Minister Leo Varadkar has said.
The minister told the Irish Independent he was concerned about the pensions crisis facing workers, saying "reform and simplification" were the best ways to restore confidence.
Analysts have warned that hundreds of company pension schemes are set to shut down as a result of low interest rates and regulatory rules.
Some 750 defined benefit schemes have been shut down in the past decade.
But there are still around 600,000 people with this type of pension, which sets the payment level based on income at the point of the retirement and years of service. The Department of Social Protection said the environment for defined benefit provisions "has deteriorated markedly in the past eight years, and the cost of providing guaranteed benefits has increased at a rate that has not been covered by the investment returns earned by pension schemes".
"Although bond yields have increased in the days since the US election, it is much too early to predict whether the problems will ease," it said.
And Mr Varadkar said a "more coherent and easier to understand" system was needed. He recently launched an open consultation on the Pension Authority's proposals for reform of private pensions.
In relation to his plans for a universal system, the minister said it will "take time, and it's important that we get it right".
"My strong view is that successful pension reform is only possible with a broad social consensus, or at least a good measure of it," he said.
"The introduction of a universal pension system will be the most fundamental reform of our pension system in a generation and will benefit many more generations to come.
"It's essential that we do this thoughtfully and carefully so that future pensioners will benefit from comfortable as well as long retirements.
"And it's also essential that we grasp the nettle and get on with it.
"The Universal Retirement Savings Group is currently studying this area and will advise the Government when it concludes its work."