Ireland announces name for second-pillar scheme in bid to increase coverage
The government of Ireland has announced the name of the public service pension scheme to be introduced to aid an increase in pension coverage among workers.
The Labour TD and welfare minister, Joan Burton, announced the name of the scheme, MySaver, at a dinner last night held for the Irish insurance industry.
Burton said the MySaver scheme was specifically designed to cover those workers with no other pensions coverage than state provisions.
The second-pillar system currently covers less than half the working population.
The debate over whether Ireland would implement a mandatory, or quasi-mandatory auto-enrolment system, similar to that in the UK, has been ongoing since the current government came into power in 2011.
However, little movement has publically been seen, since initial mentions of a mandatory second-pillar system became entangled as a pensions tax.
Under a backdrop of economic turmoil in the country, which has suffered severe decline in recent years, public support for pensions coverage was not deemed high enough.
At last night’s dinner, however, Burton said that, while a reformed state pension would help alleviate poverty and remain financially viable, occupational and private pensions coverage needed improvement.
“This is why the programme for government includes a commitment to reforming the pension system,” she said, “to progressively achieve universal coverage, with particular focus on lower-paid workers without occupational pensions.”
She said her view was a soft-mandatory approach, such as the UK auto-enrolment system, over compulsion, but with scaled savings.
She described this as the best, most proactive way to increase coverage.
However, she said the introduction would best be supported by more favourable economic conditions.
“The government is committed to the introduction of a comprehensive occupational pension scheme – a MySaver for those without pension coverage.
“It is critical the consumer benefits from the opportunities afforded by the larger economics of scale a supplementary pension system might bring. So watch this space, as we will soon clarify our intentions.”
Jerry Moriarty, chief executive and head of policy at the Irish Association of Pension Funds, however, played down the significance of the annoucement.
He said, amid the ongoing debate about pensions coverage, the name of the scheme was only a small piece of the puzzle.
“It shows there is some talk going on,” he said, “but this doesn’t really move it on that far. We still don’t know what the structure is, when we are looking to get it done. There are much more fundemental issues to be sorted out.”
In October last year, Burton admitted Ireland’s auto-enrolment was still some years away, and would only be implemented once the country’s economy showed signs of recovery.
She also backed away from mandatory coverage for non-savers, going against recommendations from the OECD made earlier in the year.
Ireland’s actuaries also recently lobbied the government, calling for mandatory coverage to be introduced over the favoured soft-compulsion approach.
The Society of Actuaries said a system for compulsion should be developed for implementation by 2019.
They said developing auto-enrolment, only to then move towards compulsion, would be a waste of resources.