Ireland needs to act “urgently”to put in place by 2020 an auto-enrolment system, which would boost private pension coverage.
"A road map needs to be put in place for the introduction of an auto-enrolment system for all Irish businesses. I am calling in the Government to make it an urgent priority to ensure that an auto-enrolment system is put into Irish law by 2020. I believe this can be done through crossparty agreement," Brian Hayes MEP said.
His comments come against a background of declining private pension coverage in Ireland. Recent figures from the CSO show that just under half (47 per cent) of all workers aged between 20 and 69 years had a private pension in 2015, down from 51 per cent in 2009 and 54 per cent in 2008.
Moreover, the recent Melbourne Mercer Global Pension Index found that Ireland’s pension system is good, but has serious sustainability problems into the future.
“There is a pension time bomb coming down the tracks, there is no doubt about that. Our pension system is going to become more and more squeezed as our population inevitably gets older,” Mr Hayes added.
In 2013 the OECD suggested that Ireland adopts a mandatory, or compulsory system over auto-enrolment, on the grounds that it has led to better outcomes. Earlier this week the Institute for Fiscal Studies in the UK published a report showing that its implementation of automatic enrolment has so far led to “substantial increases in workplace pension participation and saving”.
Mr Hayes has suggested that Ireland create its own system, whereby every employee is automatically enrolled in a pension scheme to which they should contribute at least 1 per cent of their monthly salary which is matched by their employer.
“This should be done with a view to increasing overall monthly pension contributions to 8 per cent of monthly salary,” he said.