The Irish Times view on pensions: Time to act

 

Pension reform is a thorny and complex issue, as criticism of the Government’s plans to iron out the anomalies in the State system and bring it up to date have already demonstrated.

Nonetheless, the Government is right to face up to its responsibility to reform the pension system and make it fit for purpose. Increasing life expectancy has made it imperative that action is taken now.

The Department of Social Protection has begun a consultation process to tidy up the myriad anomalies in the State contributory pension system with a switch to assessment based on total contributions over a working lifetime.

In a constructive contribution to the process the Irish Congress of Trade Unions has accepted that there are a range of anomalies and inconsistencies in the current yearly average method of assessing entitlements and has agreed in principle with the move to a total contributions approach.

However, Congress has expressed concern about elements of the new model, particularly with regard to the number of qualifying years and the plan to increase the retirement age to 68 by 2028. The Government is proposing that 40 years’ social insurance contributions should be required to qualify for a full pension but Congress says this target fails to take account of legacy issues still evident in the contributions of workers nearing pension age.

Given that comprehensive social insurance coverage is less than 30 years in place, this could negatively impact on the potential of older workers to accumulate the number of contributions required to receive a full pension. This is a serious issue which will have to be thrashed out in the consultation process. The challenge facing returning emigrants is another issue, but the current system, under which a person returning home to Ireland to work at the age of 52 and qualifying for a full pension just 13 years later is not tenable. There is no easy way to sort out the anomalies but the argument for a total contributions system is overwhelming.

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