Irish government dismisses early access proposals as counter to policy
IRELAND - Calls to grant pension savers early access to their retirement savings have been dismissed by the Irish government as not being desirable, as they "ran counter" to current proposals.
The proposals, discussed last week in the parliamentary committee on jobs, social protection and education and backed by the Irish Brokers Association. Proponents argued they would encourage saving into pension funds becausethe money would be more freely accessible.
The matter was later raised in the Dáil by committee member Mary Mitchell O'Connor, a Fine Gael TD, with John Perry, a minister in the department of jobs, enterprise and innovation arguing that pension savings should be viewed as a long-term investment and "locked away until retirement".
"Early withdrawals of pension savings are not permitted or desirable for several reasons," he said, arguing that the tax relief granted on any such savings were meant to provide for the member in retirement.
He added: "Allowing access to pension savings before retirement or pension age would be a significant change to pension policy and the basis of pension savings in Ireland.
Perry conceded that the option of allowing early access to increase spending power was attractive, "particularly at the moment".
"However, the resulting reduction in pension savings could have significant negative consequences in the long term and in particular it fails to address the group who may be most affected by personal debt or mortgage arrears," he said.
The minister added that younger savers were unlikely to have "significant" savings and in a climate where pension funds had seen negative returns over the past years, early access would represent "very poor value for money".
"There is no guarantee the funds could be repaid or that people could make up these losses. Where people are close to retirement, an early withdrawal of funds could significantly diminish the pension they receive as they may not have time before retirement age to fill the gap left by such a withdrawal."
He reiterated the government's support for increasing pension fund coverage - currently at 51% according to Perry - with the introduction of automatic enrolment and a "national employment savings scheme", saying that any proposals to access savings before retirement would "run totally counter" to such proposals.