Irish Life’s chief executive, Gerry Hassett told delegates at a pensions conference, organised by his company, that 70% of Irish adults believe that the Government is not currently actively trying to encourage people to save for their retirement.
He added that the Government’s plan to end tax relief for pensions at the marginal rate will make it hard to persuade middle income customers to put money away for 20 or 30 years. As much as 85% of Irish Life pension customers earn less than €70,000 per year.
“The private pensions industry is built on the people of middle Ireland and they need to be supported in their efforts to make provision for retirement. There’s a real danger that this noble objective could be forgotten because of the previous abuse of the system by a tiny minority of people,” Mr Hassett said at yesterday’s conference.
He added that the pensions industry was happy to play a role in addressing the economic challenges, but said that it is being asked to do too much.
“Even without the pension levy, the industry was targeted to finance €1 billion of the total €15bn fiscal adjustment for the public finances. Having signed up for that adjustment, the additional imposition of the pension levy has had a devastating impact.”
The Irish Brokers’ Association (IBA) agreed that the last cut in pension tax relief (from 52% to 41%), coupled with the levy, has already persuaded thousands of private sector pension savers to reduce or halt their pension contributions. Data suggests that funding the average public sector worker’s pension costs five times the amount that the average private sector worker has saved for their retirement.
“The Government has repeatedly said that there would be no new income taxes in the upcoming budget, but by introducing the pension levy and by enforcing the planned reduction of pension tax relief, the Government may persuade a huge proportion of private sector pension savers to abandon their pensions and achieve much of its deficit reduction by stealth,” said IBA chief executive Ciarán Phelan yesterday.
Meanwhile, Mr Hassett also said that more support is needed for lower paid workers and women; stating that the latter, in particular, have “less opportunity to build a pension pot, given the more stop-start nature of their working lives”.