Written answers

Thursday, 24 November 2016

Department of Social Protection

Pensions Reform

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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135. To ask the Minister for Social Protection if he has considered the introduction of an auto enrolment pension scheme for workers across the economy; and if he will make a statement on the matter. [36750/16]

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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As Minister for Social Protection, I have previously indicated that the development of a new, universal, workplace retirement saving system for those workers without supplementary pensions will be a priority area of policy reform.

This development of such a system is consistent with the key recommendation contained in the Organisation for Economic Co-operation and Development’s (OECD) Review of the Irish Pensions System, published in 2014, which concluded that the single greatest goal in Irish pension policy should be to increase pensions coverage through the introduction of a mandatory or quasi mandatory earnings related scheme and/or by improving financial incentives.

Latest CSO figures indicate that the rate of private pensions coverage decreased during the economic downturn from 51% in 2009 to a current rate of 47%. Clearly, a substantial portion of the population may suffer significant unwanted reductions in living standards in their retirement years unless they begin to save for that retirement.

Work is already underway on this reform. Last year, a group was established, chaired by the Department of Social Protection and made up of senior officials from a range of public bodies and international pension reform experts, to look at the elements of a Universal Retirement Savings System and to produce a roadmap for the Government to consider. The primary aim is to develop a system that provides for universal coverage and that also significantly improves adequacy of provision over time. Initial work has concentrated on whether the best model would be one which is mandatory for all workers without supplementary retirement savings coverage or one which would automatically enrol those without supplementary retirement savings coverage while allowing an opt-out.

Analysis of international systems has been undertaken which clearly demonstrates the importance of establishing consensus across political, business and civil society lines in delivering such a system. Whilst there is much to learn by looking at the strengths and weaknesses apparent in aspects of other countries’ pension systems, there is no blueprint for reform that Ireland can implement directly and any solution must be tailored to fit the Irish situation. To this end, consultations have been conducted and more are planned with consumers, representatives of employers, trade unions, the pensions industry and advocate/interest groups as well as a range of Irish and international experts in this field. Any decisions by Government will also be informed by the conclusions of the recent consultation process undertaken by the Pensions Authority aimed at developing measures to reform and simplify the wider pensions system.

I hope this clarifies the matter for the Deputy.

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