ISME warns mandatory pensions will cost jobs

SMALL firms’ lobby group ISME believes mandatory employer-funded pensions would result in thousands of job losses.

The organisation said yesterday that from the perspective of small and medium-sized enterprises (SME), mandatory employer pension contributions are a “no-go” option — adding that SMEs “could not afford to make a contribution to employees’ pension schemes, due to the significant costs already being experienced by the sector, at a time when companies are struggling to stay afloat”.

Individual responsibility for retirement income must be demanded, it said.

ISME was responding to the Government’s Pensions green paper.

In making its submission, ISME cited examples where mandatory employer pensions have been put in place in other countries, usually with a less developed framework and where other retirement savings were minimal.

According to ISME chief executive, Mark Fielding: “These schemes have proven to be flawed in many aspects and have reduced the level of pension coverage in many instances. A move from a voluntary system to any form of mandatory employer pension contributions in Ireland would have a similar effect and be totally counter-productive as it will increase costs, leading to employers cutting jobs to maintain the financial viability of their businesses.”

“SME owner/managers have stated that the introduction of employer mandatory pensions would be the last straw and leave them with no option but to let people go.

“If the Government is serious in its concern for the working citizen who will not save for retirement on their own initiative then — rather than placing the onus on employers — pressure must be put on the working citizen themselves, as is the case in other areas, deemed to be for the common good, for example, the smoking ban,” he added.

Last week the Irish Association of Pension Funds also opposed a mandatory scheme, and instead proposed SSIA-style tax credits for pension savings.