Brennan ponders mandatory pensions

The Government may have to "think the unthinkable" on mandatory pensions in the face of continued apathy, the Minister for Social and Family Affairs, Séamus Brennan said yesterday.

Speaking at the Irish Association of Pension Funds (IAPF) annual benefits conference, Mr Brennan said that unless the trend showing that just half of the workforce has personal pension provision was "aggressively addressed and reversed, then hundreds of thousands of people face into a retirement on the basic social welfare pension of €9,000 a year".

"We just cannot stand around and do nothing," said the Minister, who will receive a report from the industry regulator, the Pensions Board, next month outlining options for improving pension coverage, cost and adequacy.

"It is possible that some type of mandatory provision will emerge from the review but, at this stage, I have an open mind on how we might develop such a system," the minister told delegates.

He said he had asked the Pensions Board, which has been examining five pensions models, three of which include some measure of mandatory provision, to "be radical in its review and to come up with specific and targeted proposals".

Apart from the numbers with no pension provision, the Government is also concerned that even those with private or occupational pensions are contributing nowhere near enough to fund a comfortable retirement.

"At the end of the day, our objective is to have a pensions system which we can afford and sustain and one that will deliver adequate incomes to people in retirement," said Mr Brennan.

Speaking outside the conference, the Minister said he had asked the Pensions Board to examine the possibility of limiting any mandatory pension provision to younger workers.

Several delegates attending the conference said that increased the probability of pensions being seen in a poor light by the very people the Government was targeting.

Earlier, the conference heard that one of the major problems for the industry was communicating the benefits of pension savings - including tax relief at up to 42 per cent on contributions.

Speakers drew comparisons with the special savings incentive scheme, the success of which put flexible pension products such as personal retirement savings accounts in the shade.

EU commissioner Charlie McCreevy, who outlined changes to EU pension legislation that come into force today, told delegates the key to success was "not to make things too complicated".