Retirement crisis - Pensions nettle must be grasped

In the face of escalating and ever more frightening warnings around pensions, and the very real prospect of real poverty for hundreds of thousands of people and their dependants, the Government’s inaction on this festering crisis seems at best recklessly negligent.

At its worst it seems indifference almost criminal in scale.

It is hard not to think that if public employees’ pensions were as threatened as most private sector pensions are, that this issue would not remain pretty close to the top of the political agenda until it had been resolved. In many instances this threatened shortfall has materialised and workers have retired on a fraction of what they funded and anticipated. Many more still working have been told that their expectations, expectations paid for over a lifetime’s work, will not be delivered.

Nearly every reliable source on the issue warns of a looming catastrophe, but Government does not seem to have the stomach to face up to what has the potential to be an almost unprecedented social crisis. Rather than try to avert a collapse, rather than develop the long-term, big-picture strategies needed on an issue of this scale, it focuses much of its energy on what has gone before and will always remain unchangeable.

This newspaper has persistently advocated for the appointment of a pensions minister to bring the urgency and weight needed to try to resolve the situation, and two weekend reports add force to that argument. The imminent cabinet reshuffle offers an opportunity to accept that daunting challenge, one that will have to be faced sooner or later in any event.

One weekend report, on foot of a briefing from the Irish Association of Pension Funds, suggested that most workers living on a private pension can expect an income lower than the dole. The study also pointed to the changing demographics — fewer workers but more pensioners, and warned that the State may, in time, introduce means testing for the contributory social welfare pension. It suggested that a private pension above €230 a week would rule out any State benefit. Implausible as this may seem, it cannot be discounted and if introduced, or even partially introduced, it would have devastating cross-generational consequences.

A second weekend report pointed out that the State-owned AIB pays up to three times the national average on behalf of its employees into their pension pot. The bailed-out bank pays up to 18% of an employee’s salary into a defined contribution scheme. Though the funding level follows a Labour Court agreement it seems at least inappropriate, and utterly inequitable.

The scale of the problem, if viewed coldly, and Government pension obligations are added to the national debt, is more than chilling. It has the potential for industrial chaos — ESB and Aer Lingus pension deficits are on a scale that threaten energy and transport stability — and social chaos.

Government may, once again, kick the troublesome can down the road, but the burden will then fall on the generation already deeply indebted and struggling to make ends meet. This nettle must be grasped, and the sooner the better.