Hibernian backs calls for 'soft' mandatory pension schemes

Irish insurance group and pension provider Hibernian has supported the call for a system of soft mandatory pensions to be introduced in the Irish market.

Deputy chief executive, Stuart Purdy said: “The soft mandatory proposal recommended today by the IIF builds on some of the ideas we highlighted in our Global Pensions Puzzle publication earlier in the year, such as the Kiwi Saver in New Zealand, and represents a very practical and workable solution for the pensions challenge which we currently face in Ireland.

"Our report examined responses to the pensions crisis undertaken in New Zealand, Sweden, Chile and Australia.

"It highlighted the potential of a scheme such as the New Zealand soft-mandatory scheme to be a real solution in the Irish market because it operates by automatically enrolling employees in a pension scheme from the time they start working.

"This resolves one of the large problems in relation to Irish pensions, which is that so many people defer starting a pension until after thirty-five,” he continued.

Hibernian also suggested that the complexity of the pensions system is a further barrier to understanding and participation.

“The system should be simplified along the lines of an SSIA style tax-credit system," Mr Purdy said.

"While full-scale mandatory pensions may be something which the market here is not ready for, the Government could do a lot more to make existing incentives work better.

"Rather than claiming tax allowances, a cumbersome system which most people claim not to understand, a simple SSIA-style tax credit would tune more people into the benefits of pension saving.

"There's a wonderful lesson to be learnt from SSIAs and it would be a shame to waste it."