Pensions industry warns against mandatory move

The pensions industry last night warned the Government against moves towards mandatory pensions and reiterated its belief in incentivising voluntary private pension provision.

Irish Association of Pension Funds (IAPF) chairman Joe Byrne said the Government's success with SSIAs showed it was possible to incentivise people if approached in the right manner.

He also urged the Minister for Social and Family Affairs Seamus Brennan to address urgently the minimum funding standard which, he said, "remains a threat to the continuation of defined benefit schemes".

Speaking at the annual dinner of the IAPF, Mr Byrne congratulated Mr Brennan on the recent initiative to allow people earn additional income with affecting their State pension entitlements.

"It's very clear that we need to save more and work longer," he told an audience of more than 1,000 last night in Dublin.

"In the good old days, people worked for 45 years and retired for 10. Now we want to work less and draw a pension for 25 years and more."

This required a substantial increase in pension contributions.

"It is no good wishing that this were not the case and designing all sorts of regulations to preserve the status quo. Times have changed and pension arrangements must keep pace."

Mr Byrne said pension schemes worked best when employers wanted to establish them.

Compulsion would likely lead employers making no more than minimum compulsory contributions "resulting in poorer adequacy for the vast majority of workers than that currently enjoyed".

The IAPF chairman said the "continuing erosion of good quality defined benefit schemes, due in part to Government unrealistic regulations on the funding standard" was effectively Ireland's pension time bomb.

He said the State could address the threat to pensions by reducing the minimum funding standard burden as well as introducing a State underwritten annuity fund.