Improving consumer confidence in pension system
The Tánaiste and Minister for Social Protection, Joan Burton T.D., has today (3rd February 2015) announced a series of measures aimed at tackling Ireland’s low rate of workplace pension coverage, improving consumer confidence in the system, and ensuring greater efficiency and oversight of pension schemes.
The Tánaiste firstly announced the membership of the Pensions Council, the body established to help strengthen the pensions environment and give consumers greater input into pension policy.
Secondly, the Tánaiste confirmed Government’s approval to proceed with work to develop a roadmap and timeline for the introduction of a new supplementary workplace retirement saving scheme. Such a system will, when introduced, help increase the number of workers with workplace pensions.
Thirdly, the Tánaiste confirmed that work is under way between her Department and the Pensions Regulator to reform and simplify the pensions landscape to ensure schemes operate effectively and that there is a regulatory structure which gives pension savers confidence in the system.
The Tánaiste said: “It is essential that we increase the number of workers with supplementary pensions so that people have improved security and peace of mind in retirement. It is also essential that we reform the system to improve the governance and regulation of schemes and give consumers confidence in the system. The package of measures announced today is aimed at addressing all of those issues.”
The function of the Pensions Council is to advise the Minister for Social Protection on matters of relevance to pensions, with a particular focus on policies to support the sustainability and adequacy of pension provision. It will represent and protect the consumer and ensure that the system has a far stronger consumer focus.
Membership of the Council has been constituted to ensure the relevant skills, specialist knowledge, and experience is in place to allow for the provision of collective advice, information and assistance in the development of pensions policy.
Mr Jim Murray, former Director of the European Consumers Organisation (BEUC), will chair the Pensions Council. The new members, recruited though the Public Appointments Service, are:
Ms Roma Burke
Ms Kirstie Flynn
Mr Anthony Gilhawley
Mr Brendan Keenan
Ms Sandra Rockett
Ms Sinead Ryan
Dr Shane Whelan
The Council will also include:
Representative of the Department of Social Protection –
The Pensions Regulator – Mr Brendan Kennedy;
Member nominated by the Minister for Finance as a representative of the Central Bank – Marie Louise Delahunty; and
Member nominated by the Minister for Public Expenditure and Reform as a representative of the Department of Public Expenditure and Reform – Peter Brazel.
Universal Retirement Savings Group
Just 40% of private sector workers have pensions, and the problem is particularly acute among low-paid workers. The decision by Government to proceed with work to develop a roadmap and timeline for the introduction of a new supplementary workplace retirement saving scheme is in line with the Programme for Government commitment to “reform the pension system to progressively achieve universal coverage, with particular focus on lower-paid workers”.
The broad role of the Universal Retirement Savings Group will be to consider the constituent factors involved in constructing an efficient and effective universal retirement savings system and bring forward a recommendation in the form of a roadmap and estimated timeline for introduction. This will outline cost estimates, key features, provisions, design and potential phase-in timeframes. The process should be completed by Q4 2015, following which proposals will be brought to Government for consideration.
The group will facilitate input from sectoral interests and utilise the expertise of groups such as the pensions industry, representatives of small, large and multinational employers, trade unions and consumer/interest group representatives.
Reform and Simplification of Pensions
In order to successfully deliver a universal pension scheme, there is a need to underpin this scheme with reform and simplification of the wider pensions landscape. This is essential to achieve increased coherency and consistency in the pension system and to increase the confidence and understanding of pension savers. The Tánaiste confirmed that work is under way between the Department and the Pensions Regulator on proposals to help improve the governance capacity of Defined Contribution schemes so that they have a greater ability to provide consistently good value, good investment choices and high standards of communication to members. The staff of the Regulator’s office have begun work on proposals and will consult further with the Department regarding the timeline for their introduction.