Friday 24 November 2017

Early raid on pension funds 'would not solve debt crises'

Finance Minister Michael Noonan. Photo: PA
Finance Minister Michael Noonan. Photo: PA

Charlie Weston Personal Finance Editor

ALLOWING people early access to their pension scheme money is a bad idea as banks will just end up raiding the funds, a leading insurance broker said yesterday.

But the Government backbencher who is promoting the idea said she was "quietly confident" it would get the support of Finance Minister Michael Noonan.

Fine Gael TD Mary Mitchell O'Connor said she had been contacted by hundreds of workers, self-employed people and small business owners who see getting some money out of their pensions before they retire as something that would offer them a financial lifeline.

Thousands of people who are struggling to meet mortgage repayments have money locked away in a pension. They cannot touch this money until they reach retirement age.

Deputy Mitchell O'Connor said she had been working closely with the Irish Brokers Association which has proposed to an Oireachtas Committee that people should be able to get some of their retirement savings before they retire.

Although Minister for Social Protection Joan Burton said she opposed the idea, the TD said: "Joan Burton definitely said no, but I am quietly confident that may be changed and the Minister for Finance will come round."

Deputy Mitchell O'Connor said people getting to use pension money ahead of retirement could provide a €1.5bn boost to the economy.

The measure could be restricted to money in additional voluntary contributions (AVCs), which are supplementary pensions, so that people do not end up eating into their entire retirement savings.

But leading pension expert Gavin Gilmore of Dublin-based Power Lynch Insurance, which is a major investor in, questioned the wisdom of a raid on private retirement money.

Taking out retirement money now would just postpone problems for people. This was especially the case as the average size of a fund was just €100,000 -- not enough to provide a comfortable retirement. Any money taken out of a fund, either before or at retirement, would have to be taxed, Mr Gilmore added.

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