ISME: Gulf of inequality in pensions between public and private sector workers

ISME said private-sector workers will play their part in pensions reform, but only if they are treated 'equitably'.

Any Government proposals for pensions reform will be dead in the water if they exacerbate the "gulf of inequality" that already exists between public and private sector workers, business group ISME has warned.

As the Government puts the finishing touches to Budget 2022 ISME said that its members, along with private-sector workers and the self-employed, will play their part in pensions reform, but only if they are treated 'equitably'. 

Neil McDonnell, chief executive of ISME, said that 40% of private-sector workers have no pension other than the contributory (or non-contributory) old age state pension and said the Government is considering further restrictions on the ability of workers to save for an adequate pension.

“We acknowledge that the subject of pensions tends to discourage even the most ardent of savers, but it is an extremely important subject to discuss as a worker’s pension is usually the second-largest asset they have after their family home," Mr McDonnell said.

"Any government proposals for pensions reform will be dead in the water if they exacerbate the gulf of inequality that already exists between public and private sector workers." 

Private sector workers and the self-employed will play their part in pensions reform, but only if they are treated equitably.

ISME said the public service pensions liability is underfunded by €150bn, while social welfare pensions are also unfunded, with the liability totalling €359bn.

"Even with the reforms introduced for new public servants in 2013, public sector workers enjoy risk-free, guaranteed-income pensions, which they do not make an economic contribution towards, while private-sector workers bear all the risk and tax liabilities on pensions which will return a far lower level of income," ISME said.

Mr Mc Donnell said Ireland's pension problem is more than twice as big as the national debt. 

"The solution to this is not to make private-sector pensions harder to fund, it is to make our state pensions sustainable," Mr McDonnell said. 

"ISME recognises that auto-enrolment is on the way for employers; this is something that ISME has campaigned for over the last two decades."

"However, we must also recognise that our personal contributions to the social fund, at 4%, is the lowest in the EU. We cannot complain about the coverage of state pensions if we are unwilling to contribute meaningfully to them," he said.