Ibec calls for early access to pensions

IBEC, THE group which represents businesses and employers, has called on the Government to allow individuals to access certain classes of pensions earlier than scheduled as a “once-off crisis response” measure.

Noting the success of similar schemes in countries such as Denmark and Iceland, Ibec said such a measure would provide a domestic economic stimulus of €1.8 billion.

Its proposals would apply to additional voluntary contribution (AVC) schemes and personal pensions but not to defined benefit and defined contribution occupational schemes, as to do so would “weaken future pension provision and exacerbate existing adequacy issues”, Ibec said.

“During the boom years, some individuals invested in personal pension funds and AVCs, but have now seen their incomes fall significantly,” Ibec chief economist Fergal O’Brien said. “Allowing early release of a portion of these funds would enable such individuals to offset lost income with their savings, which are locked away, while at the same time providing a wider economic benefit.”

The Government has previously dismissed calls to allow early access to pensions, arguing that it could have significant negative consequences in the long term.

Under the Ibec proposal, the early draw-down of funds would only be permitted during a three-year window and would be subject to tax at the standard rate. It also proposes a cap of 25 per cent on the amount of the draw-down that could be used for debt repayment.