The Minister for Finance Brian Cowen has called on pension providers to make pensions easier to understand for customers and to disclose the hidden costs of retirement saving as part of the drive to increase pension coverage.
Addressing a conference of financial advisors today Mr Cowen said that other countries are prepared to make some tough choices for the public good in the pensions area and that Ireland should not shy away from tough decisions to meet the cost of an ageing population.
According to recent projections, public spending on pensions, health and long-term care is set to increase from 11.2 per cent of GDP in 2005 to some 21.3 per cent in 2050.
"Irrespective of the shape of our pension system for the future, it is of course incumbent on the pensions industry to ensure transparency and, without over-simplifying, reduce complexity in the personal pension products offered on the market," Mr Cowen said.
" The cost of personal pensions - particularly what are termed hidden costs is also a critical issue for the industry. The availability of attractive, competitive products has a clear potential to make a tangible difference to individuals' decision-making in the pension arena," he added.
Mr Cowen said that while there broad consensus that population ageing is a serious issue across the developed world each country solutions must be found at local level.
"We must tailor our national approach to pensions in light of the distinct needs and characteristics of Irish society and of the economy building on what we have already achieved in the pensions area," he said.
"I am hopeful that significant numbers of these individuals will see that there is a real long-term benefit in continuing the savings habit developed under the SSIA scheme. This will supplement the significant support provided to almost half the workforce benefiting from tax relief for pension contributions."
He added that new savings opportunities should flow from the development and deepening of the financial sector and this process will intensify with the creation of a single European financial market.