OECD launches review covering 'totality' of Irish pensions system
IRELAND - The OECD has launched a comprehensive review of Ireland's pension system, with the think tank given a remit to examine the introduction of auto-enrolment and ways to "encourage and facilitate" greater investment of assets in the domestic market.
Announced by the minister for social protection Joan Burton in late February, the scope of the review has now been clarified by the Department of Social Protection following the arrival of the OECD's party.
Described as a "short and focused review", the government said it hoped it would be completed by the end of the year.
"It will encompass the totality of pension provision in Ireland - state, private, occupational and public sector," a statement said, with the OECD asked to look at domestic investment by schemes, as well as the "structure, role and interaction" of occupational and private funds, and levels of tax breaks granted to members.
Burton added: "Although the current pensions policy framework and recent reforms were developed to take account of the current economic crisis, we need to consider whether further pension reform is needed to reflect our continuing economic circumstances."
The OECD will examine both the sustainability and adequacy of Ireland's retirement system, as well as report back on how equitable it is at present and how to ensure flexibility in the labour market, such as through extended working lives.
Jerry Moriarty, director of policy at the Irish Association of Pension Funds, said he looked forward to working with participants in the review, but added that one of the problems facing the country's system was the number of recent reviews that had not led to any decisions.
James McConville, partner at law firm Mc Dowell Purcell, echoed his views, referencing the National Pensions Framework unveiled by the previous government in 2010.
"The National Pensions Framework has been knocking around for the best part of two years - but there hasn't been very much change brought forward by that thus far," he said.
McConville speculated that the change in government this time last year, as well as the "arrival of the troika" would have refocused the government's attention.
Moriarty added that the review came at a busy time for the industry - referencing the recent reinstatement of the funding standard - and said that even with the department's announcement of the review's parameters, the OECD's mission was still "vague".
"It's clear that, if you were focused on adequacy and coverage, you can't continue to have a situation where only 50% of the working population has pensions coverage," he said, arguing that most countries with voluntary systems had been able to overcome this threshold solely through the introduction of auto-enrolment or compulsion.
"I wouldn't be surprised myself if there were a little bit of gauging how the UK auto-enrolment is working out," he said.
"Clearly, if auto-enrolment isn't working out, then all you're left with is compulsion."
The IAPF has previously spoken out in favour of a National Pensions Default Fund, with several of the country's politicians referencing similar ideas in parliamentary debates.
McConville said the OECD's terms of reference suggested it would take a "long, hard look" at all pillars of the system.
He added that the National Pensions Reserve Fund, used to recapitalise the country's banks, had now been "frittered away".
"There is less room for manoeuvre and we are almost back to where we were before the National Pensions Policy Initiative (NPPI) report in the late 90s," he said.