Pensions crisis - It’s time for a minister for pensions
Mr Cowen said the pension document would be a “very long-term framework”, setting out Government thinking on pensions and retirement age.
Last month Spain raised its retirement age to 67 for all people born after 1959, while Greece raised the age to 61. Britain will phase in a retirement age of 68 over the next 40 years. We are unlikely to avoid this trend and this is just one of the many adjustments, welcome or otherwise, we can expect in pension arrangements because of the convergence of two unavoidable realities.
Half of the problem is that we are all living longer.
The average Irishman now reaches 77, Irishwomen reach 82. Therefore, we all have to rely on pensions for far longer than our predecessors.
Even if the world’s economy was not in tatters, pension schemes, as we once knew them, could not cope with that unprecedented demand. Just as the banks’ lending policies have had terrible consequences, their investment decisions surrounding private pensions were nothing short of disastrous.
In 2008 the performance of Irish private-sector pension funds was the worst in the world. Values fell by a shocking 35% and it is difficult to imagine there will be a recovery in the medium term.
The majority of private schemes are in deficit and struggling to reduce obligations or rebuild funds. Unless you are employed by the state, directly or indirectly, this will have a significant impact on how you fund your retirement.
In the face of this crisis there have been suggestions that the state must take over the running of pensions in private sector companies or breach a European Court of Justice ruling. At this point in the cycle it is unlikely that such a proposal would meet stiff opposition from employers. The 2007 ruling found that pensions must be protected on foot of an EU directive.
The difference in pensions security, funding and expectation have become one of the issues dividing public and private sector workers.
The only thing that both have in common is that their pension hopes seem in considerable jeopardy.
ICTU’s David Begg has advocated a new pension arrangement for some time, one that would cover private and state employees. Considering the crisis all pension schemes are facing, that idea may be worth looking at because we cannot continue as we are.
Mr Cowen is expected to announce a Cabinet reshuffle shortly and included, we are told, will be a realignment of ministerial responsibilities.
Surely this offers Mr Cowen the perfect opportunity to consider appointing a senior minister for pensions?
We have several departments of questionable worth but we do not have a pensions portfolio.
It was never more badly needed and it could begin to re-establish the kind of security that everyone needs, be they private or public workers.
It could also use the great funds that would be at its disposal to try to regenerate our economy by giving preference, where possible, to investing in Ireland. Most importantly it would bring the focus and great urgency to the crisis that it so badly needs.
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