For two decades, successive governments have failed to address the pension challenge posed by people living longer and saving less for their retirement. Since 1997 little progress has been made in tackling a mounting crisis despite numerous studies and many solemn promises of fundamental change. Too few people hold private pensions – some 47 per cent in the working age group – and the State pension alone no longer provides an adequate income.
Few areas of public policy have been more thoroughly researched than pensions and few less adequately debated by the Oireachtas nor acted upon. In 1998 the Pensions Board published a major national study; in 2000 the Commission on Public Service Pensions reported its findings; in 2007 a Green paper on pensions was published. In 2010, the National Pensions Framework outlined reform proposals. In 2013 the OECD, having reviewed the Irish pension system at the government's request, recommended a mandatory or an auto-enrolment scheme for workers as the best way to expand pension coverage. Minister for Social Protection Leo Varadkar is the latest office holder to promise a new pensions regime, and favours auto-enrolment. But this, he says, could take up to 10 years.
The Fine Gael/Labour coalition, faced with a crisis in the public finances and the banks, introduced a private sector pension levy in 2011 as an exceptional but temporary four-year measure. That promise was broken. The levy was raised for one year and also extended by a year: some €2.4 billion was collected in total. A penal levy – a tax on retirement savings – has left pension holders worse off and discouraged others from taking out pensions. CSO figures in May showed pension coverage declining since 2009, reflecting as well the impact of recession and the diminishing appeal of pension provision in a labour market where temporary employment and short-term work contracts are increasing features.
Longer life expectancy has forced governments generally to raise the age of retirement for the State pension. This rose to 66 in 2014 and has resulted in some employees retiring from work at 65 having to go on the dole for 12 months before they qualify for the State pension. In typical fashion, little apparent consideration was given to the negative impact of such a change.
. At the same time, the remarkably generous pension provision enjoyed by public office holders and by Oireachtas members has received little critical scrutiny. Oireachtas members, seeking to restore public confidence and trust in their ability to diminish the threat of pension poverty, might well question their own generous pension provisions. After all, these are funded by tax payers who also elect them.