IRELAND - The Irish government is preparing to launch its delayed green paper on pension reform and is now expected to unveil it within the month.
Speaking at the Irish Association of Pensions Funds' (IAPF) annual conference in Dublin today, Martin Cullen, minister for social and family affairs, told delegates the green paper has been completed. He added that he had discussed the contents of the green paper in cabinet this morning.
"I'm happy to say the [green paper preparatory] process is now complete and arrangements are in place to get the green paper ready for publication. I expect to be in a position to confirm a [publication] date in the very near future," he said.
Cullen said during his speech that the ministry expects to publish the paper "this month" or "November", but all indications from government are that it will be published in October.
Little of the content has been revealed at this stage as Cullen was keen to stress he wants to avoid being seen to be setting any early line on future pension policy, so is expecting to extend the consultation period until the middle of 2008.
"I would like to make it clear the purpose is not to recommend a particular route but to look at the current situation and the implications for the economy and the social implications," said Cullen.
"If I give a preference at the start of the debate it may become seen as the view of the government and the way forward. There will be a range of issues clearly set out, a range of options and I'm not necessarily convinced at this stage we have the answer. But we need to seek agreement with employers, trade unions, government, the finance houses, and everybody involved in the wider process."
While defined benefit, employer-led, schemes have been the backbone of pensions arrangements in recent years, there is an increasing shift to defined contribution and hybrid schemes - even among large profitable organisations with well-funded pensions Cullen noted - which move most of the responsibility for pensions onto the employee.
Irish government data suggests 55% of the workforce had some form a supplementary pension in 2005, many of which are funded through a defined contribution plan, at a time when an extra 350,000 people joined the workforce.
"My worry is some 40% of defined benefit schemes are now closed to new members and there is an expectation this will grow," continued Cullen.
"The move to defined contribution is more secure for employers but it means the risk does move 100% to the employer. While the preference is to see defined benefit schemes maintained, some sharing of the risk, through hybrid is a better option than converting completely to a defined contribution scheme. Clearly there is much which can be done to deliver a balance between the employer and employees."
Cullen said the demographic shift in Ireland is expected to be significant in coming years and pension reforms are essential for the stability of future society because the balance of welfare support will shift from five people per pensioner to one person per pensioner.
"We cannot allow that burden to fall on people. We have to be honest in our assessments: the employee will have their responsibility as well. It will not be sustainable to pass the buck to those whom we are employed by, whether public or private," said Cullen.
He continued: "We have to try to get people in their 20s, even of that age, to understand their pension is as important as their car or their home when they start their first job. How we enforce or encourage or make that happen we have to debate thoroughly. It is not going to be entirely the responsibility of one side or the other, it has to be shared."
The government's pensions green paper was expected to have been published in April, of the IAPF conference, so today's conference agenda was changed to focus on the development and growth of hybrid pension schemes, which allow employers to strike a balance between final salary and money purchase arrangements, and which are subsequently gaining momentum in Ireland.
Patrick Burke, chairman of the IAPF, told the audience the green paper was expected to look at pension coverage and adequacy, annuitisation, flexibility of drawdown - which is said to be becoming increasingly important in Ireland - as well as the taxation of public pension policy issues.
But he also stressed it is incumbent on the pensions industry to help employers, employees and the government in their bid to support pension provision.
"The shift of balance of risk between employers and employees has been evident for more than 20 years, and has required employees to take responsibility for their own pensions. It is important that pension arrangements can adapt to changes," said Burke.
In order to cope with the growth of employers moving to hybrid arrangements, the IAPF today announced it has launched a "dedicated hybrid forum" for members, sponsoring employers and their members who want to learn from schemes that have already moved to a hybrid arrangement.