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Pension Reform in Ireland
Among policymakers it seems that the support for an increased role by the private pensions industry in providing retirement income coverage and adequacy grows stronger with practically every government report or consultation on the subject, without any increasing strength in the supporting arguments. The Government's Roadmap for Pension Reform, published in March of last year, is the latest such publication of this kind.
There is no empirical evidence to suggest that private pension providers are better at delivering pensions than public ones, but plenty of evidence to suggest they do a far poorer job, and that the manner in which they provide pensions is poor value for taxpayer money. The costs and distribution of the tax expenditure on pensions are both expensive and problematic from a point of view of distribution. Social Justice Ireland does not oppose the idea of encouraging people to save for their retirement privately. But it is clear that the benefits of this encouragement are going to the people who need it least, and there is no justification for the tax relief granted by the state to subsidise a pension in excess of what would be required for a person to live a decent standard of living.
Automatic Enrolment, seemingly Government's preferred method for providing "universal coverage" (a term we use loosely) to the system will, in any format and by any measure, greatly increase the (already significant) cost to the Exchequer of a private system that is failing to achieve its goals. The private pension industry already receives a subsidy that (across all different reliefs and exemptions availed of) costs the Irish taxpayer billions of euros every year. Automatic Enrolment will increase this bill by several hundred million euros more.
Yet pension coverage rates are low, and adequacy of income retirement from private pensions is generally poor.
It should be clear that the only way to ensure that anomalies in coverage in the Irish pension system are closed, and ensure that each retired person has sufficient income to live life with dignity, is by implementing a universal pension based on residency and setting that pensions at a level that allows a minimum decent standard of living. (Social Justice Ireland has published research showing how such a proposal could be paid for). This would ensure that the contribution that each person makes to Ireland’s economic and social well-being, whether in employment, working in caring roles, engaged in further education or working in the community, is recognised with a benefit in retirement which allows them to retire without the risk of poverty.
A forthcoming conference, organised by the Pension Policy Research Group, will look at aspects of Auto Enrolment and the implications for the Irish pension system. This will be the 5th annual conference organised by the PPRG and will take place at Trinity College (building and room to be confirmed) on the morning of Friday June 21st (09.00 to 13.00). Further information is available here. There will be three presentations:
1. Dr. Emer Mulligan, School of Business and Economics, NUI Galway
- Pensions in Ireland: The Perspectives of Irish Citizens and Implications for Pensions Systems and Reforms in Ireland and the EU. This report, part of Project Fair Tax, will be launched by Hildegarde Naughton TD. Dr. Mulligan's presentation will be followed by a discussion panel on the findings, featuring three industry experts.
2. Dr. Micheál Collins, School of Social Policy, Social Work and Social Justice at UCD
- Tax-based incentives after Automatic Enrolment.
3. Dr. Michelle Maher, Department of Sociology, Maynooth University
- Automatic Enrolment in the UK and New Zealand: Lessons for Ireland.
There will be a panel discussion on the issues raised featuring:
- Elizabeth Bowen (Senior Executive, Small Firms Association),
- Michael Taft (Economist, SIPTU),
- Brid O'Brien (Head of Media and Policy, Irish National Organisation for the Unemployed),
- Donal Keating (Director of Tax at PwC Ireland).