Green Paper on Pensions Consultation Process

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Green Paper on PensionsConsultation Process

• Learning from International Experience
• 29th May 2008
• Orlaigh Quinn

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Consultation process

• Green Paper published October 2007
• Over 250 submissions to date
• Six regional seminars
• Todays conference
• Consultation process ends 31 May

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Views

• This country seems to be obsessed with the older
  generation, much to the great disadvantage of the
  young.
• The big problem about pensions is nobody
  understands fully the rewards of pensions.

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Overview of submissions

• No consensus on overall pension model
• Strong emphasis on the role of the State
• Criticism of security of private pensions
• To require citizens to make minimum contributions
  without any guarantee of any/ minimum return,
  would be equivalent to requiring people to make
  regular minimum bets from their earned income
  with a bookmaker!
• Many individual submissions focus on State
  pension entitlements

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Overall pension model

• Mandatory system - public or private
• Ireland needs a compulsory pension system
• Workers already have to contribute to PRSI,
  which IS a mandatory pension. Forcing workers to
  contribute to another mandatory pension will be
  seen as yet another government stealth tax.
• Auto-enrolment - with access to funds
• Higher State pension with higher PRSI
• Current system works well

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Private pensions

• System of tax reliefs
• Access to Approved Retirement Funds (ARFs)
• Retirement age
• Charges / regulation

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Tax reliefs

• Greater benefits going to higher earners
• I am subsidising tax relief for the high
  earners There is no incentive for low earners
  such as myself to purchase pensions.
• Matching contribution (SSIA-type) would give
  greater clarity
• Reduce tax reliefs to standard rate
• Provide relief for all at higher tax rate
• Provide tax credits

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Approved Retirement Funds

• Unfair that DC occupational schemes have to
  purchase annuities
• Extend ARF option to all pensions
• Ownership, control and inheritance
• Alternative view that extending option would
  jeopardise pensions
• We all underestimate our own longevity!
• State annuity fund would provide better value
  than market annuities

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Retirement age

• Increasing retirement age is an effective way of
  reducing costs
• People want to have the option to work longer
  (but voluntarily)
• Employers must focus on retaining older workers
• it makes good sense to keep the work place open
  to our senior citizens
• Improve public servants early retirement scheme.
  Its not really attractive at the moment.  This
  is a good way of employing energetic young
  people.

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State pension key issues

• If the State can ignore her existence, so can
  he!
• Marriage bar / homemakers
• Backdate beyond 1994
• Award credits rather than disregard
• Average contributions test
• Move to total contributions approach
• Self-employed farmers

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Submissions also concerned with

• Private and occupational pensions
• Protecting defined benefit entitlements
• Public sector pensions
• Benchmark or too high?
• Charges on pension funds and contributions
• Opaque and excessive
• State pensions
• Means-testing
• Non-contributory State pension and qualified
  adults
• Indexation
• Pensions based on residency

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Next steps

• Submissions still coming in
• Analysis of issues raised in consultation process
• Publication of consultation report
• Consideration by Government
• Develop framework by end-2008

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Final thought

• The main thing with pensions is keep it simple
  and make it fair, treat all people as equals and
  make things easy to understand and people will
  respond

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See the submissions on
www.pensionsgreenpaper.ie