Fine Gael has criticised the Government’s pension plan, describing it as a “massive gift to the pensions industry”.
The party’s social & family affairs spokeswoman, Olwyn Enright, said the proposals would delight the pension companies, while leaving most private sector employees feeling “very worried about their future”.
Under the Government’s proposals, published today, the age at which people qualify for the State pension will increase over time - to 66 years of age in 2014, 67 in 2021 and 68 in 2028.
The current system of tax relief at the standard and higher rates is also to be phased out; instead a State contribution, which will apply to existing occupational and personal pension schemes, will equal 33 per cent tax relief.
Ms Enright said: “The Government is forcing private sector workers into defined contribution schemes where the individual is expected to carry the entire risk of poor investment returns.
“This is a scary prospect considering how badly investments have performed over the past year. After all, Irish pensions were the worst performers of any OECD country over the last ten years,” she said.
Labour’s Roisin Shortall described the framework document as a “mixed bag”, saying containing some positive elements, but others that will create significant problems.
Ms Shortall said: “Everyone acknowledges that the extension of the retirement age is inevitable given the changes in the demographic structure of our population and the fact that people are generally living considerably longer than when pensions were first introduced.”
However, the proposed lead-in time for the raising of the retirement age is far too short, she said.
The proposed standardisation at 33 per cent of tax relief on contributions to private pension schemes is welcome, but it is regrettable that the Minister for Finance has ruled out any move on this for this year at least, she added.
The Small Firms' Association (SFA) criticised the decision to introduce mandatory pension provision. Director Patricia Callan said it was "premature and will prove costly to the Exchequer, to business, and to employees, without any associated benefits in the long-term”
“Moving to mandatory pension provision at this time makes no sense, as we still have a comparatively young population in comparison to the rest of the EU, and have by no means exhausted the many opportunities still available to us to increase the success of voluntary schemes,” she said.
"With small employers struggling to keep their doors open, and trying to reduce costs, it is unacceptable to impose an extra direct tax on labour for employers of 2 per cent."
Ibec director Brendan McGinty said mandatory employer pension provision would fuel wage demands, "particularly in labour intensive industries and small employers. These are businesses already struggling to survive".
"It makes sense to increase gradually the State retirement age in order to help ease the burden of providing pensions. Ibec supports a phased increase of retirement ages by voluntary agreement between employers and employees," he said.
Age Action called for increased supports for older workers to accompany the increased pensions age.
Spokesman Eamon Timmins said: “What today’s announcement means is that the gap will get larger between the time people retire and when they are able to receive the State Pension they have contributed to all their lives.”
“Many people currently working in the private sector have signed contracts to retire at 65, but they may not be able to draw down their State Pension until they are 66, 67 or 68. This means they may have to live for up to three years from their own resources, by seeking another job, or drawing the dole.”
Máiréad Hayes, chief executive of the Irish Senior Citizens' Parliament, welcomed the framework but also expressed concern over the increase in the minimum age for the non-contributory State pension.
"While we support the option to allow people to continue working longer, the mandatory age increase may not fully take the individual health and well-being of older people into consideration."