Auto-enrolment is ‘obvious answer’ to ‘huge’ pension problem
Chartered Accountants Ireland look for increase in private pensions to cope with funding challenges
Following several delays, auto-enrolment was due to be introduced by 2022. Photograph: Getty Images/iStockphoto
Any changes to the State pension age will need parallel reform of private pensions, an accountancy body has said, as it warned that workers could otherwise face a “retirement in poverty”.
Chartered Accountants Ireland, in its submission to the Pensions Commission’s consultation process on the sustainability of the State pension, said it wants to see a move to increase private pension coverage in Ireland, something that can be achieved through the introduction of auto-enrolment.
Without such a co-ordinated approach, there is a risk of “workers living their retirement in poverty” the body said.
Cróna Clohisey, public policy lead with Chartered Accountants Ireland (CAI), said that auto-enrolment, by which workers automatically save for their retirement with an incentive from the State and employers, “is the obvious answer to what is now a huge problem. This scheme will incentivise people to save and that in turn will reduce the reliance on the State pension.”
A survey of some of the institute’s 29,500 members to support its submission, found that 93 per cent support the introduction of auto-enrolment.
Following several delays, auto-enrolment was due to be introduced by 2022. However, a lack of progress in finalising details of the scheme, combined with the impact of Covid-19 on employers, means that the scheme is now unlikely to meet this target date.
Respondents to the CAI survey also expressed a preference for keeping the State pension age at 66 for now, with 10 years’ notice given to workers for any future planned increases.
“Almost six in 10 respondents among our members said that the State pension age should not increase beyond the current 66 years. For many, this already means a working life well in excess of 40 years, during which considerable tax and PRSI contributions will have been made. Workers deserve clarity on what age they will become entitled to the State pension so that they can plan for their retirement and we are calling for 10 years notice to be given to any increases in the state pension age,” Ms Clohisey said.
Members of the body also want to see the mandatory retirement age, used by employers, abolished, so as to afford workers the choice to work as long as or retire as soon as they choose to.