Ireland’s next government must make a decision on pension reform early in its term to avoid its rollout being delayed further, the Irish Association of Pension Funds has urged.
The end of the current parliamentary term has seen little concrete detail or action on the rollout of automatic enrolment to boost pension coverage, despite the Fine Gael/Labour coalition’s previously commissioning a report on reform for the end of last year, and pledging reform as part of the 2011 coalition agreement.
The cross-departmental Universal Retirement Savings Group (URSG) will now report within the first six months of the next parliamentary term, Fine Gael pledged if it won today’s election.
Jerry Moriarty, chief executive of the IAPF, speculated that, because the URSG was initially set to report by the end of last year, the timeline laid out by Fine Gael implied there was still much work to be done.
He urged whichever party that comes into power following the vote – which has seen predictions of a minority government, as no party was polling above 28% of the vote – to take action early.
“It is one of those issues that probably needs a decision early in the government because the closer you get to the end of a government term, the less likely people are to do that big, fundamental change,” he said.
Moriarty said there would be a significant lead-in time before any such system got underway, predicting up to three years before underpinning regulation was even finalised.
In addition to both current government parties, Fianna Fáil, polling behind Fine Gael at 21% but ahead of Labour, pledged its support for a universal pension system based on automatic enrolment.
Labour’s manifesto appears to support a system whereby pension pots would follow workers, backing a system whereby savings would “follow [workers] through their working life if and when they change jobs”.
The party also highlighted the benefits of scale that would come with the rollout of a universal system.
“[Auto-enrolment] will have a transformative effect on pension coverage over time, not only driving up pension coverage but driving down costly administration charges associated with individual pension plans currently,” its manifesto said.
For its part, Fine Gael said it would push for the introduction of a national pension tracking service – potentially distinct from the system advocated by Labour that could see pots follow members.
It said it would seek to attract emigrants home by supporting the development of a European tracking service, a likely reference to the so-called TTYPE project under development by a number of Continental pension providers.
The matter of housing was also touched on by several of the parties, with Fianna Fáil proposing that investments in affordable housing could be incentivised by including such investments in a list of assets Irish defined benefit funds could use to offset a 10% risk reserve requirement.
“There are a lot of characteristics of social housing that would make sense for pension funds,” Moriarty said, “but I do worry there is almost this pressure on pension funds to invest in certain assets.
“At the end of the day, trustees are going to have to make a decision as to whether it’s an appropriate investment for their fund or not.”