Irish Life CEO warns of 'crisis of confidence' in pensions policy
The Chief Executive of pensions company, Irish Life, has warned of a "crisis of confidence" in pensions policy which could dissuade middle-income earners from saving to fund their retirements.
Gerry Hassett was speaking at a major conference on pensions policy and revealed that 85% of Irish Life’s pension customers earn less than €70,000 a year and were trying to provide for relatively modest incomes in retirement.
Mr Hassett said: "The private pensions industry is built on the people of middle Ireland and they need to be supported in their efforts to make provision for retirement. There’s a real danger that this noble objective could be forgotten because of the previous abuse of the system by a tiny minority of people."
Mr Hassett highlighted a new survey undertaken by Amarach Market Research for Irish Life which found that 70% of adults aged 24 to 65 believe that the Government is not actively trying to encourage people to save for retirement.
He also pointed out that funding the average public servant’s pension costs five times the amount that the average private sector worker has saved for their retirement.
He said: "The ratio of 'workers to retirees' will drop by half by 2030 [from 6:1 to 3:1] with drastic implications for the country’s ability to support pension payments for those dependent on state pensions.
"Should the Government move to end tax relief for pensions at the marginal rate, it would be hard to persuade middle income customers to put away money for 20 or 30 years.
"Without a private pension, someone earning €60,000 a year at present would face a drop of between 60% and 80% were they to depend only on the State Pension at retirement."
Hassett said that while the pensions industry was happy to play a role in addressing the economic challenges, the industry was being asked to do too much.
He said: "Even without the pension levy, the industry was targeted to finance €1bn of the total €15bn fiscal adjustment for the public finances. Having signed up for that adjustment, the additional imposition of the pension levy has had a devastating impact."
Hassett said that the pension levy had hit profits at Irish Life by €13m in the first six months of the year.
