The Irish Government’s latest foray into the world of pension reform has been buried under an avalanche of snow. Given the ageing population in Ireland and the ever-mounting costs of providing for people in their old age, this issue deserves far more front-page space than the ability of people to survive two days without a fresh supply of bread or milk. Such is human nature, however, that we find Storm Emma dominating the front pages whilst the government plans for pensions are firmly buried deep in the business sections.
The report – A Roadmap for Pensions Reform 2018 - 2023, certainly contains some good ideas. Automatically raising state pension age in line with increasing longevity will take the politics out of this difficult decision and ensure that future increases will be driven by the facts rather than by whether it is politically feasible to push it through a future Dáil. Similarly, setting the state pension rate at 34% of average earnings and linking future increases to a formula based on wages and prices will prevent pensions being used as a political football in elections rather than being based on social equity. There are worthy measures to reform pensions’ governance and others to remove anomalies from the taxation system for those who work beyond their retirement age. There are also changes proposed to the public sector pension system, which is a subject that requires a separate blog or six.
The headline-grabbing proposal is to follow the UK and initiate an auto-enrolment pension system for people in the private sector. Although somewhat belated - this initiative was first proposed by Minister Séamus Brennan in 2009 - it is a welcome movement on the problem of the hundreds of thousands of people in Ireland who are solely reliant on the State pension.
However, after all this time, it is a great disappointment that the roadmap is startlingly short of detail on their key proposal. It tells us that the civil servants are busily working on a strawman automatic enrolment design, which will be published sometime in the second quarter of this year. This will be followed by a public consultation with the aim of getting legislation into the 2020 Dáil session and ultimately people will start paying into whatever solution is devised no later than 2022.
That timetable means that this proposal is vulnerable to a change in government caused by the general election that will have to happen during this timeframe. The government’s lack of urgency on this issue doesn’t reflect well on how seriously they are treating the issue of ageing in Irish society. Whilst they saunter along the road they have mapped, the greying of the population moves on relentlessly. Perhaps they should stop appearing on TV, leave protecting the population from the snow to the professionals, and concentrate on protecting the population from poverty in retirement. That warning alert is now flashing red.