IRELAND - The Irish Association of Pensions Funds (IAPF) is calling on the government to encourage a growth of industry-wide pension arrangements similar to that seen in the Netherlands.
Speaking last week at the IAPF annual conference, Patrick Burke, chairman of the association and director for investment development at Irish Life Investment Managers, told delegates he believed "there may be considerable scope" to consider the development of occupational pension-style schemes which cover an entire industry sector.
"The Netherlands has large industry-wide schemes which have achieved solidarity and significant economies of scales," said Burke, adding he would like Ireland to use its social partnership culture to help improve take-up of pensions among individuals where coverage is at its lowest".
The Irish government has today confirmed it will publish its long-delayed pensions green paper on October 17, in a bid to tackle the increasing pressure on future state pension funding and lack of private provision take-up.
The IAPF has, as a result, been investigating the options the government could take to improve pension provision coverage and Burke stresses "further exploration of the [industry-wide scheme] approach is preferable to others".
Speaking to IPE this week, Burke added he would like the green paper to look specifically at three possible reforms: more flexibility in the terms of pensions drawdown and annuitisation, along with introduction of pension tax credits, and sector-wide pension schemes.
"If one just looks at the question of how to improve coverage, one of the approaches might be a mandatory [pensions contribution] system but that is effectively increasing tax contributions.
"We think sector-wide schemes would be more appropriate, based on the tools of our social partnership structure, between employers, partners and trade unions, which is very effective in Ireland."
He continued: "Some sectors may not have as much union coverage as others but we are seeing an increase in defined contributions schemes from employers so this approach might be appropriate to service sectors, hairdressers, butchers, for example.
"The alternative is all of the responsibility rests on the employee, and we have to tackle this with individual contracts. Under the employer-based [industry-wide] schemes, there is an oversight role, a supervisory role, and there is an employer participation too," he added.
There has been some success to the introduction of a sector-wide scheme in Ireland, as the Construction Workers' Pension Scheme of Ireland - set up last year to replace the Construction Federation Operatives Pension Scheme - now has in excess of 93,000 construction workers and 9,450 participating employers.
That said, there could also be some downsides were the Irish pension market to shift more towards a Netherlands-based system.
Wil Bekkers, a board member of the Dutch Association of Company Pension Funds (OFP) as well as director of EFRP, predicted at the IAPF conference last week the number of total number of pension schemes would reduce, as more employers move staff into sector-wide schemes, from 700 to "500 two years from now" as pensions move to "collective DC".