'Almost 50% of workforce have no pensions scheme'
Hundreds of thousands of people may be facing old age poverty as almost half of the workforce have no pensions scheme, it was warned today.
Social Affairs Minister Seamus Brennan said the country was facing a startling pensions problem, which could leave many in difficulties upon retirement.
“Out of a workforce of some two million, an estimated 900,000 do not have a private or occupational pension to boost their incomes in retirement,” Mr Brennan said, as the Pensions Board released its Annual Report for 2004.
“For women, in particular, the statistics on pensions are disturbing. Only one third of working women outside the public service have pensions and many of these have pensions that are far from adequate.”
Mr Brennan said he was considering a range of ways to increase pension coverage – as well as examining the possible introduction of a mandatory scheme.
The minister asked the board to examine ways to tap into the savings habit created by the Government scheme, the SSIA accounts, in a bid to create a pensions or savings scheme with widespread appeal.
“The issue of introducing more mandatory requirements is under close examination, and I have also asked that the Board explore innovative ways of encouraging and allowing people to work past official retirement dates and age restrictions, if they wish to do so,” the minister said.
The board is on track to deliver the statutory review of the pensions system to identify new or alternative schemes by October.
Mr Brennan said the board had selected five systems to highlight in the review, which he was making public to stimulate further debate.
The first option is an enhancement of the current voluntary supplementary system, with a tax credit of 42% on employee contributions.
The second is a mandatory supplementary private system, under which employers and workers would each have to contribute a minimum of 5% to a pension scheme.
Another system would involve a mandatory supplementary state defined contribution system, comprising of a minimum contribution of 5% from employers and employees.
The fourth option involves a mandatory supplementary State earnings related system, which would involve workers receiving 1% of annual earnings for each year of contribution.
The last option would be an enhanced basic state pension of 50% of average industrial earnings – compared with the current rate of 34%. Mr Brennan said the additional cost of this benefit would be met by a separately identifiable charge.
“The Board’s review has made progress and has identified options but I want to again stress that if we are to decisively tackle the pensions problem then radical solutions will have to be seriously considered,” Mr Brennan said.
Michael McNulty, chairman of the Pensions Board said the National Pensions Review was well underway.
“We believe that it will be a balanced and constructive contribution to national decision making on the future shape of Irish pension provision,” Mr McNulty said.
The new figures from the board show a marginal increase in coverage from 51.2% in 2002 to 52.4% in the first quarter on 2004.
Coverage for the key target group – those over 30-years – rose from 57.4% to 59.1%.
