Pensions report offers easy wins and tough choices

Cantillon: Reluctance persists on autoenrolling workers into private pension schemes

A mere fiver boost to the pension every year will not transform the Government’s credibility with younger voters.

A mere fiver boost to the pension every year will not transform the Government’s credibility with younger voters.

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Publishing the landmark report of the Pensions Commission late on a day when the entire focus of the Government and the news headlines was on the final resolution of Ireland’s delicate compromise on corporate tax was not a very auspicious start.

Irish governments have a long history of long-fingering real reform of pensions even though, alongside mortgages, saving for retirement is the single biggest financial investment for most people.

However, this report gives the Government some easy wins on actions.

Forced retirement

Minister for Social Protection Heather Humphreys has said it will be the end of March next before Cabinet considers the implementation of the report’s recommendations but it has already got important backing from employers’ group Ibec for one of the most fundamental points – legally linking the age at which employment contracts can force people to retire with a State pension age that will rise gradually over time.

Indexing the pension payment and finally moving from the inequitable “yearly averaging” approach for assessing pension eligibility to the fairer total contributions approach are also uncontroversial.

Thorny issue

But there are more contentious decisions to be made, too. Raising PRSI contributions to pay for all the report’s compromises and softly softly embrace of longer, more healthy lives remains a thorny political issue, even if, without it, the whole system is unsustainable.

And there is still an inexcusable reluctance to bite the bullet on autoenrolment of all workers into private pensions schemes, inevitably from a very low starting point and a lengthy phasing-in period.

Throwing a fiver on the pension every year may buy some grey votes but it is doing nothing for the Government’s credibility with younger voters.

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