Auto-enrolment pension system should be put in law by 2020 – Hayes
Brian Hayes MEP today said that the government needs to urgently put in place a roadmap for the introduction of a system for all Irish employees to be automatically enrolled in a workplace pension scheme.
“There is a pension time bomb coming down the tracks, there is no doubt about that. Our pension system is going to become more and more squeezed as our population inevitably gets older. It is a very good thing that people are now living longer and that we have a healthier society. But we need to address the funding of our pension system if we want our pensioners to be well-protected into the future.
“A roadmap needs to be put in place for the introduction of an auto-enrolment system for all Irish businesses. I am calling in the government to make it an urgent priority to ensure that an auto-enrolment system is put into Irish law by 2020. I believe this can be done through cross-party agreement.
“I believe that to begin with we should have a system whereby every employee is automatically enrolled in a pension scheme to which they should contribute at least 1% of their monthly salary which is matched by their employer. This should be done with a view to increasing overall monthly pension contributions to 8% of monthly salary. Of course, employees should be given a short period of time in which they can choose to opt-out of a mandatory pension scheme.
“While there needs to be sufficient lead in time to such a policy, we have to recognise that Ireland’s pension system is still behind the curve. In 2012, the UK introduced an auto-enrolment system which is at early stages but is working well and providing long-term sustainability. Auto-enrolment systems have been introduced in Australia, New Zealand and similar systems exist in the Netherlands, Sweden and Denmark. These countries are recognised as world leaders in pensions.
“In Ireland we are far too dependent on our state pension system. We have a very low take up of workplace pension schemes. Less than 40% of Irish workers are covered by a workplace pension scheme. The best way to deal with both of these problems is through an auto-enrolment system which reduces dependency on the state system and ensures people have supplementary pension pots built up.
“A recent global study of pensions called the ‘Melbourne Mercer Global Pension Index’ stated that Ireland’s pension system is good but has serious sustainability problems into the future. It is time that we had a real open debate about pensions in Ireland. Politicians cannot kick the can down the road as this will inevitably come back to haunt us.”