Trust in the Irish pension system is at an all-time low, the head of the industry lobby said yesterday, warning that the Government should not rush to introduce any form of mandatory pension saving.
Rachael Ingle, chairwoman of the Irish Association of Pension Funds (IAPF), said the €2 billion-plus raid on private sector funds through the private sector pension levy meant trust had to earned back again before people "will do anything over the minimum required to save for their retirement".
Addressing the IAPF annual benefits conference, she said the industry wanted to conduct research on how big an issue inadequate pension coverage in the State is “before we compel all the people of Ireland to save for retirement at a time when they are all cash strapped”.
“There is a huge amount of work to be done before any type of auto-enrolment solution is introduced in Ireland,” she said, saying any system would need to involve affordable and meaningful contribution rates.
Her comments come as benefits consultant Mercer is pressing the Government to act on auto-enrolment.
A survey by the IAPF, published yesterday, shows that just 10 per cent of the remaining 890 defined benefit, or final salary, schemes in Ireland are open to new entrants.
More than 40 per cent of them no longer allow even existing members to accrue further benefit.
Defined contribution (DC) schemes, where the risk is borne by the member rather than the employer and where any pension depends on the investment performance of contributions, continue to grow rapidly and now account for €33 billion of overall pension scheme assets. That is 36 per cent of the €91 billion pension assets in Ireland.
Pressure on schemes
Ms Ingle said it was clear from available data that, for many of those saving through DC schemes, the level of contributions they are making “will not deliver anything near the income expected or hoped for”.
The pressure on defined benefit schemes is evident in data which show that just half of remaining schemes provide for discretionary pension increases and, of these, 61 per cent have not granted any such increase to pensioners for more than four years.
Ms Ingle also expressed wariness over the Government’s commitment to end the private sector pension levy as planned at the end of next year.
“My concern is that the Government will do a U-turn on that as they did this time last year when the pension levy was not only extended but increased,” she said.
