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Pensions Policy in Ireland needs to be parked for all future election campaigns by getting all party agreement now – HAYES

Pensions Policy in Ireland needs to be parked for all future election campaigns by getting all party agreement now – HAYES

Brian Hayes MEP, Member of the ECON Committee in the EU Parliament speaking at the launch of the “Mind the Gap” report by Aviva, Dublin Thursday Sept 8th.

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“Irish politics is bad at doing long-term planning. It’s not in our political DNA. Our horizon is unfortunately election to election. Getting national agreement on issues for the long-term, on complicated and difficult issues across party lines, is very rare indeed. But if ever there was an issue crying out for agreement – it’s in the area of pension provision. It is the long-term issue that needs to be settled.

“We have had the reports and consultations over many years. We have seen in other Member States of the EU what works and what’s acceptable to the public. We now have to move to decision stage and then onto an implementation of making it work.

“At the very least it seems to me that agreement on an auto-enrolment policy option involving employers and employees is possible and as has been seen in the UK achievable over a realistic timeframe. Who pays for that and how it’s paid is of course the key issue. There are no simple solutions. But one thing is obvious – we all have to put more money aside to supplement our retirement income.

“A national pension policy is urgently required with all party support. If we could get agreement on that policy, park it for future election campaigns and then no matter who is in government, implement it over the coming years – that would represent progress.

“In a funny way the current make up of the Dail, where the government doesn’t have a majority – places as much responsibility on all parties to settle this issue. A solution could be found by clever political leadership.

“Today’s published report on pension provision in Ireland “Mind The Gap” is both timely and important. Highlighting as it does that the pensions provision gap in Ireland has increased by over €7billion in just 6 years. Ireland should be saving an extra €27.8billion this year alone if people are going to realise an adequate pension on retirement.

“The shocking truth is that more than half of all Irish workers have no pension cover. And the picture across Europe is no better.

“Pension cover is falling. Returns on pension schemes are not being realised because of the low interest rate environment internationally. A dramatic move from DB to DC schemes has happened in a very short time.

“The CSO’s study Population and Labour Force Projections 2016 – 2046, sets a realistic tone to the pension debate. Overall population projections of course are based on the assumptions, but the assumptions in this CSO report need to be considered.

“The 2013 study clearly indicates a rapidly ageing population. The number of people aged over 65 is set to increase from the 2011 Census figure of 532,000 to over 1.4 million by 2046. During the same period the number of people aged 80 or over will increase from 128,000 to close to 500,000.

“These are quite dramatic changes in population structure in Ireland.

“I’ve also put on record recently my support for a pan-European personal pension product (PEPP) which would be licensed to operate throughout the EU. While we await the proposal from the Commission after public consultation, this idea has merit. An EU backed scheme which has application across all member states is certainly unique. I also hope that the final ratification of my report on IORP 2, which will come before the European Parliament in October provides the legislative certainty and clarity for the true potential of cross-border IORPs to emerge across the EU. Our work has improved the rights of members and beneficiaries but also opening up the potential of greater investment and returns to schemes.

“Of necessity, political effort during the last seven years was directed towards stabilising the country’s finances and getting the economy back on a sustainable growth path. The heavy lifting has now been done and the country is in strong recovery mode. There is now an opportunity to lift our heads and prepare for the challenges ahead. A rapidly ageing population has huge implications for health and social welfare policies.

“In the first instance a growing number of longer living retirees will place increased demands on the pensions system. Most retirees still depend on the state for their pensions, be it contributory, non-contributory or public sector pensions. Inevitably pensions will take an increasing share of public spending.

“Charlie McCreevy may have made some mistakes, but establishing the National Pension Reserve Fund was a really good idea and he deserves credit for it.

“It is the responsibility of today’s politicians to make adequate provisions for future requirements. A comprehensive approach to a national pension policy will of course mean that those at work making private pension arrangements will need to supplement state pensions. A rapidly increasing cohort of over 80s, many with complex health care demands, will put huge strains on the health budget.

“The economic challenge facing politicians is twofold. Managing the economy in order to keep it on a high growth path. Just think of the options we would have if annual growth of say 3% per year over the next decade was achieved. And 3% is conservative. Political stability and having a stable public finance position is crucial for that decade of growth.”

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