This morning, I appeared on RTÉ’s Morning Ireland to discuss the implementation of the long-awaited pension auto-enrolment scheme. The Government must ensure the newly announced pension scheme remains in State control, as I am concerned that privatising the scheme would lead to significantly higher charges and costs for workers.
You can listen back to my interview here:
There are a number of key questions that must also be answered by Minister for Social Protection Regina Doherty and Finance Minister Pascal Donohue, relating to this scheme.
The scheme is based on very successful models in Australia, New Zealand and the UK, where workers, employers and the State contribute, to give workers a significant savings amount when they reach retirement age.
So, we need to know what the Government plans to contribute to this scheme? It is notable that neither Minister Donohue nor the Taoiseach were at the press launch, as all schemes of this nature involve a significant government contribution. It is bizarre that such a scheme would be announced just a few weeks after the budget where none of the publications referenced the long term financial cost of this proposed new scheme.
Currently people on private pension schemes get a Government contribution through the tax breaks that these schemes attract, and it’s important that the workers in the new scheme are treated equally.
It’s important the scheme remains a State scheme that could be managed by the NTMA. If it were to be privatised there is a real concern that workers would face very high charges and costs.
It’s also necessary to ensure that each individual contribution remains in the worker’s name over the period of their contribution, and can be identified upon retirement.
The Government needs to confirm that the scheme is a standalone scheme, seperate from the current state contributory retirement pension, which is based on PRSI contributions.
The Minister needs to reassure workers contributing to the new scheme that it will not be used to means test the state retirement scheme in the future.
The sooner the Minister’s proposals come before the Oireachtas for detailed examination, the more assurance can be given to workers that their savings can be properly safeguarded under the new scheme.