Ireland debates mandatory system
IRELAND - The Irish government has been advised by the Pensions Board to implement an increase in the state pension and create a new mandatory supplementary system.
But the government has appeared to reject the regulator's ideas.
"This report recommends that the most appropriate and practical approach to improving the position of pensioners in Ireland would be a combination of an increase in the State pension with a mandatory supplementary system for those at work who are not making supplementary provision," the regulator said in a report to the government.
The system would be known as the Special Savings for Retirement (SSR) and individuals would hold Special Savings for Retirement Accounts or SSRAs.
The recommendation is in response to a request from the government in February this year.
But the board was not unanimous in its proposal.
"The board member nominated by the Minister for Finance believes that owing to such factors disclosed in the report as the significant Exchequer costs, the broader macroeconomic effects and the prospective adverse impact on existing voluntary provision, the Board's recommendation does not comprise a workable option," the board said in a statement.
And the government called the report a "technical examination of the practical issues associated with a supplementary pension system".
It said: "The Pensions Board has not recommended a mandatory supplementary pensions system. It has, instead, examined several options and concluded by giving an outline of what such an arrangement could look like."
It pointed out that the recommendations could cost up to €3bn over 10 years.
Pensions Board chief executive Anne Maher announced she was stepping down last month.
Under the board's proposals, the contributory State pension would be increased to 40% of Gross Average Industrial Earnings over 10 years until 2016 or similar period.
"In addition, it is recommended that a supplementary system called Special Savings for Retirement be set up for all employees who are not members of occupational schemes or do not have sufficient supplementary savings."
But it said that any change to supplementary pensions could "potentially increase complexity and may have unintended consequences".
So the board was in favour of further study of the detailed implementation of the supplementary mandatory system proposed, in combination with appropriate public consultation before the system could be introduced.