Finance Dept accused in mandatory pensions row

The Department of Finance was today accused of siding with big business in a row over the possible introduction of mandatory pensions.

The Irish Congress of Trade Unions (ICTU) claimed powerful business federation IBEC and the department had formed a pincer movement to scupper plans to force workers to save for retirement.

Peter McLoone, ICTU president, said compulsory pensions could save tens of thousands of low-paid and female workers from poverty in retirement.

“It’s naïve to think that solving the potential pensions crisis will be cost-free. This is an attempt by Finance to stifle the debate before people have a chance to understand the cost and benefits of what is being proposed,” he said.

“They should back off and allow this matter of serious public interest to be considered without spin and propaganda.”

The system, Special Savings for Retirement Accounts, recommended by the Pensions Board, would see individuals put away 15% of earnings while the State pension would be increased by €2,000.

William Beausang, who represents Minister for Finance Brian Cowen on the board, has warned it would have significant Exchequer costs and damage voluntary private systems.

It is projected that the scheme could cost the Exchequer up to €3bn a year.

Lobby group IBEC was quick to reject the idea, insisting more should be done to encourage voluntary saving.

Mandatory SSRAs would see workers pay 15% of their wages on earnings between €15,000 and €60,000. The Exchequer would stump up 5% of this in lieu of tax relief.

The board also recommended the State pension be increased from €10,000 a year to €12,000 (€193 a week to about €232).

However, IBEC believes the Government should be doing more to encourage saving rather than forcing workers and employers to put money away.

ICTU urged the Government to give the idea fair and reasonable consideration.

Mr McLoone added that the proposed national agreement, Towards 2016, provides for a green paper on pension policy, which will take account of the views of the social partners and allow for consultation.

“These proposals must be taken seriously as part of that exercise, which should not be ruling anything out at this stage,” he said.