Pensions minister 'key to tackling timebomb'

Responsibility: Joan Burton

Charlie Weston Twitter Email

August 08 2013 04:04 AM

THIS country needs a pensions minister to grapple with the crisis facing the sector, an expert has advocated.

The national pensions crisis is the single biggest financial issue facing families and it warrants its own ministry, according to managing director of the Independent Trust Company, Aidan McLoughlin, a firm that acts for private sector schemes.

Problems with retirement funds are spiralling out of control and there needs to be someone with a seat at Cabinet to disarm the pensions timebomb, Mr McLoughlin said.

"There has been much talk about Ireland emulating the pension regime of other countries, Australia and the UK in particular. Critically, each of those countries has a dedicated pensions minister at a time when reform was required."

He said the scale of the pension problems facing the State was enormous.

The OECD (Organisation for Economic Co-operation and Development) recently estimated that the shortfall in the social welfare pensions budget will amount to €324bn by 2066.

In 2008, the Comptroller and Auditor General estimated the scale of pension liabilities in respect of public sector pensions at €108bn.

Defined benefit schemes in the private sector, which are subject to the funding standard, have deficits in excess of €15bn.

Mr McLoughlin said: "The Waterford Glass case could mean that a significant proportion of this could ultimately become payable by the State, specifically the taxpayer."

In Britain, Steve Webb is the Minister for Pensions. Pensions policy is the responsibility of Social Protection Minister Joan Burton here.

The expert from the Independent Trustee Company said that it was unfair that tough pension funding standards were imposed on private sector schemes.

But there are an array of other private sector-type schemes, mainly set up by semi-state companies.

Mr McLoughlin said: "Action on these issues has been risible. Reforms applied to public sector pensions will take 40 years to fully impact.

"The deficit problem in Social Welfare led to another report (from the OECD), but otherwise no action has been taken. The deficit problems in defined benefit schemes are waiting on the results of a High Court case.

"Presumably, 'action' thereafter will consist of commissioning another report."

Tens of thousands of people are heading into retirement with little or no after-work income, due to poor investment returns, the collapse of the defined benefit model, restrictive pension fund rules imposed by those with secure public pensions and government taxes and levies.

There was a need to protect private sector pension savers from government levies and taxes and the imposition of rules that are not applied across the board.

He said the solution was to have a minister in the Cabinet who was solely focused on the subject of pensions.