With over 1 million Irish private sector workers without a pension, two pension-research organisations  on Tuesday called for a universal State pension similar to the scheme operated by New Zealand and said that there should be a "significant curtailment in tax incentives for private pensions" to achieve greater pension provision and equity. Also on Tuesday, the Minister for Social and Family Affairs, Mary Hanafin TD, formally launched the Pensions Board, Annual Report and Accounts 2007.

The Trinity College Pension Policy Research Group and TASC (Think Tank for Action on Social Change) issued a joint call for a universal State pension similar to that in New Zealand. The State pension should be significantly increased and paid for by significantly reducing tax relief for private pensions. If introduced, poverty among the elderly could be eliminated without an increase in retirement age or a reduction in other public spending, they said.

Gerry Hughes of the Trinity group said among the New Zealand policies were a universal state pension, a second-tier social insurance pension, based on contributions, to top up the universal pension and a "significant curtailment" of tax incentives for private pensions.

"It is worth noting that the combined cost of expenditure on the Irish public pension system and the tax expenditure on the private pension system here is now as great as the combined cost of the universal pension system in New Zealand,"he said.

"In the future, the combined cost of the exchequer support for the pension system in Ireland is projected to exceed the projected cost of New Zealand's superannuation system."

The universal pension would prevent poverty, while a contribution-based second-tier system would maintain individuals' incomes and lifestyles, he added.

In its submission on the Government's Green Paper on Pensions, TASC says: The year 2009 will mark the centenary of the introduction of the means-tested Old Age Pension in Ireland at rates of from one shilling to five shillings per week. Its introduction had a transformational effect on old age poverty and greatly enhanced the status of older people, representing ‘the most radical and far-reaching piece of welfare legislation enacted in Ireland in the twentieth century’.  Right through 1908, while the enabling legislation was being debated, the financial sustainability of the scheme was questioned. One hundred years later, the Green Paper again questions the sustainability of a state system of pension provision.  At a time when there is huge and justifiable concern over the costs and risks associated with private pension schemes, the TASC/Pension Policy Research Group outlines a pension system which draws on the now proven strengths of the public system and which begins to correct the inequitable treatment of taxpayers who gain little from tax reliefs for private pensions.  The core proposals are to:

• Eliminate pensioner poverty (Ireland has the second highest rate of pensioner poverty in the EU) by increasing Social Welfare pensions and to pay for the increase by reducing subsidies for private pensions (the bulk of which go to the top 20 per cent of earners).
• Introduce a universal State pension similar to the scheme which has been successfully operated in New Zealand for a long number of years.

Speaking at the launch of the Pensions Board Annual Report and Accounts 2007,  the Chief Executive of the Pensions Board, Brendan Kennedy,“welcomed the initiative that will require all pension administrators to be registered with the Board from 1 November 2008.  This will result in more effective and efficient supervision of pension schemes.”

Much of the Board’s regulatory powers apply to the trustees of occupational pension schemes.  This is appropriate given the significant assets for which trustees have responsibility.  Trustees perform an important function in looking after pension savings, usually for and on behalf of their colleagues. This new regulation will provide important support for trustees who can be confident that those they employ to carry out significant compliance tasks on their behalf are independently supervised and capable of performing the work to a reasonable standard.  Regulation of administrators will also make an important contribution to the efficiency of the Board’s regulatory efforts.

During 2007 the supervisory units of the Board were reorganised and new supervisory priorities were put in place. The Board regard these changes in operational focus as being of critical importance. Almost all of this work takes place by direct communication with pension schemes, employers and providers, and prosecution is normally only as a last resort. The Board welcomed the granting in September 2007 of the powers to levy on-the-spot fines for certain prescribed offences. 

“These offences are not new and were already classified as offences under the Pensions Act. These fines offer an alternative to criminal prosecution for trustees and employers, and represent a more efficient use of Board resources and time. The first use of these powers in early 2008 satisfied the Board of the effectiveness of this approach,” said Brendan Kennedy.

Kennedy continued,“2007 was an extremely challenging but positive year for the Pensions Board. Our regulatory activity now covers the pensions of over 800,000 active scheme members, almost 100,000 occupational pension schemes, over 130,000 PRSAs, and approximately €80 billion of assets. Investment returns in 2007 for most pension schemes were disappointing and most schemes have seen the value of their assets fall in early 2008, reflecting losses in worldwide investment markets. As pensions are long-term savings, it is inevitable that there will be times of investment losses or uncertainty. It is important that scheme members are provided with adequate and understandable explanations of investment choices and risks. The Board recommends that lower risk options be made available to members as they approach retirement and favours well-designed default investment options for all members.”

In October 2007 the Government published the Green Paper on Pensions. This important document is a comprehensive review of all the Irish pension issues.  It sets out the demographic situation and sustainability issues and the options that we might consider for adequate future pensions provision.  The public consultation process on the Green Paper was completed in May 2008.

“Provision of adequate pensions is a critical national issue for the future of the people of Ireland. The Board has played an integral part in informing and contributing to the pension debate to date and I have no doubt that it will continue to play its full role in this important process,” said Pensions Board Chairman, Tiarnan O Mahoney.
 
Overall, the Board, through its ongoing National Pensions Awareness Campaign and its general information services, claims progress in raising the levels of public awareness of pensions and pension adequacy.