Auto-enrolment Pension Scheme must remain in State control

Labour Finance spokesperson, Joan Burton TD,  has called on the Government to ensure the newly announced auto-enrolment pension scheme remains in State control.

Deputy Burton raised concern that privatising the scheme would lead to significantly high charges and costs for workers.

Deputy Burton continued:

 “At long last the Minister has published proposals for a supplementary ‘auto-enrolment’ pension scheme which will provide workers, particularly those on low and middle incomes, with an opportunity to top up their pensions at retirement.

“However, there are a number of key questions that must be answered by Minister Doherty and the Finance Minister Pascal Donohue, relating to this scheme.

“The scheme is based on very successful models in Australia, New Zealand and the UK, where workers, employers and the State contribute, to give workers a significant savings amount when they reach retirement age.

“So, we need to know what the Government plans to contribute to this scheme? It is notable that neither Minister Donohue nor the Taoiseach were at the press launch, as all schemes of this nature involve a significant government contribution. It is bizarre that such a scheme would be announced just a few weeks after the budget where none of the publications referenced the long term financial cost of this proposed new scheme.

“Currently people on private pension schemes get a Government contribution through the tax breaks that these schemes attract, and it’s important that the workers in the new scheme are treated equally.

“It’s important the scheme remains a State scheme that could be managed by the NTMA. If it were to be privatised there is a real concern that workers would face very high charges and costs.

 “It’s also necessary to ensure that each individual contribution remains in the worker’s name over the period of their contribution, and can be identified upon retirement.

“The Government needs to confirm that the scheme is a standalone scheme, seperate from the current state contributory retirement pension, which is based on PRSI contributions.

“The Minister needs to reassure workers contributing to the new scheme that it will not be used to means test the state retirement scheme in the future.

“The sooner the Minister’s proposals come before the Oireachtas for detailed examination, the more assurance can be given to workers that their savings can be properly safeguarded under the new scheme.”