Pensions sector under attack

IRELAND’s creaking pensions sector has come in for further criticism, with the head of the Pension Funds Association warning that further takes from the sector, in the upcoming budget, could ultimately kill off any long-term savings culture here.

A survey of Irish-managed pension schemes, undertaken by the Irish Association of Pension Funds, found that respondents have paid €112m via the controversial pension levy tax and that all have had to pay the levy from pension members’ funds — resulting in the value of employee benefits being reduced to cover the levy.

“Any attempts to extract more run a serious risk of making a difficult situation impossible. In considering Budget 2012, the Government needs to take into account the significant contribution it has taken from the pension sector this year, the negative impact this is having on pension savings and the long-term consequences of this,” according to association director of policy Jerry Moriarty.

He added: “While the economic conditions and volatile global investment markets have taken their toll, many pension savers are losing confidence and are concerned about possible future restrictions. In total, pension savers have contributed over €850m this year alone.”

IBEC, meanwhile, has called for further “radical” reform of public sector pensions than has been proposed by Government. While welcoming new plans to reduce the cost of pensions for new workers, the employers’ body said that any reform must extend to the pension arrangements of existing public sector employees — adding that such moves could reduce the Government’s pensions liabilities by over €20bn.

According to one of the organisation’s directors, Brendan McGinty: “Ireland is simply not in a position to fund existing public service pension liabilities. Plans to reform rules for new entrants are welcome, but need to go much further. Existing public sector workers should no longer qualify for pensions based exclusively on their final retirement salary; instead pensions should be based on an average salary of future service.”