Joan Burton warns on importance of pension reform

Just 50 per cent of workers currently have pension coverage other than the State pension

Tánaiste Joan Burton announcing the composition of the new Pensions Council at Government Buildings. Photograph: Cyril Byrne

Tánaiste Joan Burton announcing the composition of the new Pensions Council at Government Buildings. Photograph: Cyril Byrne

 

Reform of the Irish pension system is essential if we do not want to endanger the retirement income of current and future pensions, Tánaiste and Minister for Social Protection Joan Burton has said.

Ms Burton was speaking at a briefing to announce the composition of the new Pensions Council, which will advise the Minister on policy and work to ensure the pensions system has a stronger consumer focus.

And the Minister for Social Protection said she had also approved measures to improve “engagement” between deferred members of defined benefit – or final salary – schemes and those already in receipt of pensions in the event of fundamental changes in the operation of such schemes.

She also announced the establishment of a new Universal Retirement Savings Group to “develop a roadmap and timeline” for the introduction of a new universal supplementary retirement savings scheme – effectively a mandatory workplace pension.

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“We must take action to increase pensions coverage to ensure all our pensioners can enjoy their retirement with financial security,” the Minister said.

“If the system is not reformed, its long-term sustainability will be compromised, endangering the retirement income of current and future pensioners.”

Ms Burton gave no indication on when any mandatory system would be introduced but noted that the need for such a system was clear with Ireland one of only two OECD member states not to have a mandatory or quasi-mandatory employment-related pension scheme in place.

She said the new group would bring recommendations to Government outlining cost estimates, the key features of such a scheme and “potential phase-in timeframes”.

Council members

Pensions CouncilRoma BurkeAnthony GilhawleyKirstie FlynnShane WhelanBrendan KeenanSandra Rockett

All have long experience in the pensions sector. The group will be led by former director of the European Consumers Organisation Jim Murray.

Pensions regulator Brendan Kennedy will also sit on the council as will government nominees Helen McDonald (social protection), Marie Louise Delahunty (Finance/Central Bank) and Peter Brazel (public expenditure and reform).

Apart from regulations to formalise the rights of retired scheme members and those who have left companies but not yet retired, which the Minister said would be published next week, she called on the Pensions Authority, the regulator, to continue to bring forward proposals to improve the standard of both defined contribution and defined benefit pension schemes.