Yesterday the OECD published a report outlining options for the development of a universal pension system to be funded with contributions from employees and employers.
The Irish Insurance Federation (IIF), which represents Ireland’s domestic and international insurance industry, believes that the report will be of use in considering a number of key economic reforms that Ireland needs to implement if a basic standard of living is to be guaranteed for all citizens in their old age.
Responding to a new OECD report on the Irish pension system, IBEC, the group that represents Irish business, said now is not the right time to introduce a compulsory pension scheme. The group said the economic recovery was too fragile and any move to introduce such a scheme would have an immediate negative impact on jobs, consumer confidence and economic recovery.
IBEC Director Brendan McGinty said: “It’s hard to imagine a worse time to introduce a compulsory pension savings scheme. Any increase in employment costs as a result of such a scheme would undermine job creation and prolong the unemployment crisis. At a time when incomes right across the economy are under severe pressure, it makes no sense to force workers to divert income into long-term pension savings plans.
“There is a real problem with pension cover in Ireland and steps are needed to encourage more people to save for their retirement. However, now is not the right time to introduce a compulsory scheme, other options must be explored.”
The Acting Director of the Small Firms Association, Avine McNally said that the OECD report on the Irish pension system proposing a compulsory pension scheme will prove costly to business, employees and the exchequer without any associated benefits in the long-term.
“The cost of compulsory pension provision to the economy as a whole is clearly prohibitive. With small employers struggling to keep their doors open, and maintain employment, it is unacceptable to impose an extra cost on labour for employers and could prove to be the “death knell” for some small firms.”
“With many employees already having less disposable income, due to reduction in working hours, basic pay rates and other remuneration benefits, the willingness of people to accept compulsory pension savings is seriously questionable. The exchequer contribution also has to be funded by the tax-base, which is made up of business and employees, so they will effectively be hit twice,” said Ms McNally.