Keeping an eye on the bottom line in turbulent area of pensions
But Moriarty has some sympathy. People in their 20s, 30s and even early 40s have myriad competing demands on their financial resources, getting and paying a mortgage, having and raising a family.
He feels strongly there is a need to tailor its message better. “The pensions industry is guilty of making pensions extremely complicated. A lot of people switch off immediately. So you have to find a way of scaling that back and getting the basics across to people ,” he says.
“We also have to stop scaring people. This idea that you need to be saving 20 per cent of your salary or, otherwise, you are going to be in poverty in retirement. I think most people say: ‘Well, I can’t afford to save 20 per cent, so I’m not going to do anything.’
“The reality for most people, particularly where you have an occupational scheme, is that you’re not the only one saving: the employer is putting something in, the government is putting something in. So the reality is for most people, if you are starting very early, a contribution of 5 per cent [of salary] can get you a lot.”
He says the message that should be going out is that you’re better doing something than doing nothing. “Unfortunately, I think most people just take the option of doing nothing.”
Moriarty started as a humble clerk. Just six months into a college business degree in 1988, he accepted an offer from Irish Life. “It was at a time when if you did your four-year degree, that’s what you were hoping to get anyway,” he recalls.
Getting into pensions was no more than a matter of chance. “I don’t think there was anything scientific about it,” he says. “Four of us turned up on the morning in question and one was sent to insurance, one to pensions and so on.
After five years in Dublin, he moved over to the UK where his abiding memory is of his involvement in a review into a pension mis-selling scandal. More than a million people were found to have been erroneously advised to take out personal pension plans by the industry when they would have been better off in a company scheme.
The experience persuaded him to get involved on the regulatory side of the business and he returned to Dublin to join the Pensions Board, which oversees pensions in Ireland. Five years ago, he moved to the IAPF where, in May, he was appointed chief executive. Most recently, he has joined the board of Pensions Europe, an umbrella group, where he has been asked to chair a new committee on issues affecting defined contribution pension schemes.
He concedes that part of the issue is that there is a lot of distrust with anything to do with financial services at the moment.
Fees and charges
Then there is the issue of fees and charges levied on pensions savings by those managing the funds. A recent report from the Department of Social Protection noted that, in some cases, almost a third of an individual’s pension fund can de dissipated in charges, many of them opaque or simply not disclosed at all to the customer.
“It’s clear from the report that more needs to be done on transparency and value for money,” Moriarty acknowledges. He is confident from his reading of the full report that larger occupational schemes appear to be working alright. “Where there is a bigger issue is on the individual side.”
In mitigation of the industry, he notes, that, all too often, a pension purchase is a last minute rush by a person filing a return at the end of the tax year with little time to shop around. Still, he agrees that some of the figures quoted in the department report were “eye watering”.
One solution, he proposes, is to scale up pension schemes to help individual members avail of the benefits of group purchasing power on fees and charges. Such provisions are in place in other countries, notably the Netherlands and Australia, where there is a scheme for nurses and another for teachers, for instance.
That brings us back to Government policy. There has, as Moriarty notes, been no shortage of reports on the Irish pension system. “What we have been short on is implementing the recommendations and taking the actions. There is a sense that there are a lot of things we could have done in a more benign environment [of the boom years] but we have missed that.”