Pensions Board to consider compulsory pensions

Minister for Social and Family Affairs Seamus Brennan has suggested that compulsory pensions may be necessary if workers and …

Minister for Social and Family Affairs Seamus Brennan has suggested that compulsory pensions may be necessary if workers and especially women are to avoid poverty in their old age.

Speaking at the publication of the pension ombudsman's annual report, Mr Brennan said the major review of pensions strategy, being completed by the Pensions Board, would be published soon.

The review has been brought forward by over a year due to the current lack of pension cover in some sectors that could see hundreds of thousands of workers facing a retirement on less than €10,000 a year.

Mr Brennan said that he had reminded the Pensions Board to evaluate an "opt-out" pensions scheme similar to the KiwiSaver account in New Zealand.

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Under the "opt-out" system, all those starting work are automatically enrolled in a pension scheme and a minimum percentage of their wages is deducted and paid into the account.

Such schemes are based on the assumption that only a minority of employees would go through the red tape of exercising their right to opt out of the scheme.

Just under half the current workforce of two million, in the region of 900,000 people, do not have a private or occupational pension.

The lack of pension cover is particularly acute among women workers as 46 per cent of women have private or occupational pensions. Outside of the public sector only one-third of working women have pensions.

Referring to the ombudsman report, Mr Brennan said that pensions are, and would remain, key concerns for society and for a lot of people pensions now represent the single most valuable asset that they own.

The Office of Ombudsman was established in late 2003 and up to the end of 2004 it had received over 450 official complaints and had dealt with over 1,500 telephone queries.

Mr Brennan said he was particularly struck by the number of complaints that have occurred primarily because of a poor communication - or a complete lack of it - on the part of pension providers, rather than because of a particular problem with the pension scheme.