Cantillon: There’s never a right time for pension reform

Another minister, another consultation on what to do about pensions. Minister for Social Protection Leo Varadkar sounded as genuine as all his predecessors yesterday but, in truth, the process he was kickstarting looks to have more to do with tightening the noose of regulation than in cutting the often excessive costs in the sector.

Minister after minister, going back to Séamus Brennan and even earlier, has stirred the pot and pronounced grandly on the need for reform. But politics in Ireland is a five-year cycle at best and no reform of pensions is going to deliver returns in that time. Precious little has even been tried.

Speaking yesterday, Mr Varadkar became the latest to champion the need for a form of mandatory pension for everyone in the workplace. There is broad industry acceptance that only such a scheme will increase pension coverage.

At the same event, Pensions Authority chairman and veteran trade unionist David Begg said that "from a public policy point of view, it is time to do something".

It is indeed. But Varadkar himself said implementing a new scheme could take up to 10 years – that is roughly a quarter of the average working life. Investments made early have a disproportionately beneficial effect to a pension pot: accepting the sort of timeframe suggested by the Minister in effect locks another generation into a cycle of poverty in old age.

That’s the problem with pensions: it’s never the “right time” to introduce reform. In the current climate, where anything approximating a consumer charge is fudged, what chance of the Government really telling people they must live on less now to save for a future up to 40 years hence?

So scheme members will discover only close to or in retirement the paucity of their pension income and by then it’s too late to do anything about it. The successive ministers will of course be comfortably drawing down their multiple pensions from the public purse.

There is a fundamental dishonesty about “government by consultation” – at least insofar as it relates to pensions. The bottom line is that there is absolutely no political will to introduce the changes necessary to provide people with some legitimate expectation of a satisfactory level of income in retirement.