Workers without pensions automatically enrolled in new scheme under latest proposals
Workers without pensions will be automatically enrolled in a new scheme although they will have the ability to “opt out” under new government proposals.
Minister for Social Protection, Leo Varadkar, said it was “an essential objective" of his to bring in a new, universal, workplace retirement saving system for employees without supplementary pensions.
However, he admitted that the proposal will be a ten-year project.
Mr Varadkar said the current system whereby most people rely solely on the state pension in retirement is “unsustainable”.
He said the government has a duty to ensure a better system is put in place.
The minister said in order to deliver this new system, which would mirror similar pension schemes in the UK and Australia, there is a need to reform and simplify the pension landscape.
He said the confidence and trust of pension savers has been “serious damaged” and this had to be repaired if any reforms are to be successful.
Mr Varadkar said it would be a possibility that workers could agree to sacrifice part of a pay rise to put into their pension pot.
He also said that as the USC is phased out, employees could contribute part of that cash to their pensions.
The minister said it “would make sense” that employers’ would match employees’ contributions under the scheme although these details have to be worked out and he did not want to prescribe what it would “look like”.
The minister was speaking this morning as the Pensions Authority unveiled a consultation document setting out a package of proposals to reform and simplify the private pension scheme arena.
Among its proposals are higher standards for trustees of workplace pension schemes, better information for members, a reduction in the number of pension savings vehicles and an authorisation process for schemes.
Submissions are invited from all interested parties on the authority's proposals by October 3 this year.