Workers 'forced to pay into high-risk pensions'
Published 04/03/2010 | 05:00
THE Government was last night accused of forcing workers to take a massive gamble on a new pension scheme at a time when pensions are haemorrhaging money.
Workers who have not made any provision for their retirement incomes will now be forced to pay into a pension scheme.
But they will have to carry the risk of poor investment returns because there is little pension security available to them.
While the Government had guaranteed the defined benefit pensions of politicians, department secretary generals, judges and other top civil servants, private sector workers were left with only "high-cost and high-risk" defined contribution schemes, Fine Gael claimed yesterday.
The National Pensions Framework 'auto-enrolment' scheme comes at a time when Ireland remains one of the worst performers in investment pensions and the stock markets remain volatile.
In 2008, Irish pensions slumped by almost 40pc in value.
The Government's scheme represented a "massive gift" to the pensions industry, which was already "sucking" €1bn out of pensions' provision every year, Fine Gael TD Olwyn Enright said.
Under the scheme, workers aged 22 and over will be automatically enrolled unless they are already paying into an employer's scheme.
But the new proposals, due to start kicking in from 2014, will leave private sector workers feeling "very worried" about their future, the Fine Gael social affairs spokeswoman said.
"The Government is forcing private sector workers into defined contribution schemes where the individual is expected to carry the entire risk of poor investment returns," said Ms Olwyn.
"This is a scary prospect considering how badly investments have performed over the past year. After all, Irish pensions were the worst performers of any OECD country over the last 10 years."
Ms Olwyn also questioned why the Government had not looked at ways of lessening the investment risk for workers.
But the Fine Gael TD was unable to say what level of state protection or state guarantees Fine Gael would offer in a similar pensions plan. She could only say the parliamentary party was finalising its policy on this area and would soon make the details public.
Labour social affairs spokeswoman Roisin Shortall TD described the new National Pensions Framework as a "mixed bag". She claimed the proposed lead-in period for raising the retirement age from 65 to 66 was "too short".
"There are many people at this age, fit and well, who would welcome the opportunity to work for another year, but for others -- those, for instance, who might have put in 50 years of physical work on building sites -- this will be an unwelcome burden," Ms Shortall said.
ICTU chief David Begg claimed workers were being forced to hand over a portion of their wages to the private pension industry in order to facilitate "gambling and stock market speculation".
"Given that Irish pension funds -- and therefore those who manage them -- have been the worst performing in the developed world, this is like a reward for incompetence," Mr Begg said.
The union chief also criticised the absence of a Pension Protection Fund which is required by law.
"This is not the response that the crisis in our pension system requires," he said.