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Irish pension reform hinges on ‘favourable economic environment’

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The reform of Ireland’s second-pillar pension system will not happen without a favourable economic environment, according to the country’s deputy prime minister.

Joan Burton said there was broad agreement that the current level of “substandard” pension provision needed to be addressed but accepted that the reform’s authors should also be aware of its impact on labour costs.

Speaking at an event hosted by IBEC, Ireland’s employer association, the minister for social protection said she accepted the need for “clear communication” of any path towards reform and the launch of a universal pension system.

She noted the Universal Retirement Savings Group (URSG), convened by government earlier this year to draw up a reform proposal, was now considering the new system’s design and timeframe for introduction.

The minister, leader of the Labour Party, did not provide any date for reform implementation, saying it would depend on a number of factors, including the “presence of a favourable economic environment”.

But she insisted the case for reform was solid.

Burton has previously said the launch of the new supplementary system would depend on a number of economic indicators, likely to include unemployment falling to a level deemed acceptable in a country that only recently saw the near-collapse and bailout of its baking system.

Nor did the speech shed any light on when the URSG would reveal its findings, despite the Department of Social Protection’s previously saying the proposal would be published by the end of 2015.

Burton has previously told the Irish Parliament the group has so far convened five times, inviting around 35 stakeholder groups to offer feedback on its proposals.

She also said the group had spoken to experts from Australia, New Zealand and the UK – all countries that have introduced either mandatory or soft-mandatory pension systems. 

Publishing the proposal by the end of the year would allow its being debated prior to the next general election, taking place no later than April 2016, at a time when Burton cannot guarantee her party’s return to power.

The URSG has so far conducted informal consultations with stakeholder groups, being advised by the Irish Association of Pension Funds that, due to the “political reality”, an auto-enrolment system might be easier to deliver than one mandating pension saving.

The system has previously been referred to by a number of names by the minister – including Shamrock Saver, Celtic Saver and MySaver – but more recently it was christened the Universal Retirement Savings Scheme by the URSG.

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