The Tánaiste, Joan Burton, has recently confirmed the Government’s approval to proceed with the establishment of a new expert working group with a view to putting in place a roadmap and time line for the introduction of a new, universal pension saving scheme (MySaver). The group, to be known as the Universal Retirement Savings Development Group, will be headed up by the Department of Social Protection and will be made up of representatives from the departments of the Taoiseach, Finance, Public Expenditure and Reform, the NTMA, Central Bank and Pensions Authority.
Successive governments since as early as the 1970’s have considered and attempted to address the issue of private pension coverage. The OECD, in its preliminary report on its review of the Irish pension system in 2013, noted that “private pension coverage, both in occupational and personal pensions, is uneven and needs to be increased urgently“. The OECD also suggested that increased coverage could be obtained through compulsion, soft-compulsion/automatic enrolment and/or improving financial incentives for employees participating in private pension arrangements.
It is thought that MySaver will involve some form of automatic enrolment of workers. The Tánaiste has previously indicated that this would be the preferred option. However, attempts to introduce any form of mandatory pension in the past have failed – mainly on the grounds of cost. A key factor to be considered by the new Group, is likely to be how auto enrolment fairs in the UK and in particular whether or not it proves successful in increasing pension coverage there.
While increased pension coverage in the private sector will be generally welcomed, it would seem that the actual introduction of the universal pension saving scheme is still some way off. Indications are that details of the scheme are unlikely to be finalised for another year or so while the Tánaiste has previously indicated that such a scheme will only be introduced when the economy has sufficiently recovered and workers’ wages improve.