40% of workers aged between 20 and 69 have no occupational pension coverage other than the state pension, according to Age Action.
Addressing a Pensions Commission webinar earlier today, Age Action Senior Public Affairs and Policy Specialist Dr Nat O’Connor noted that in certain sectors of the economy, a majority of employers do not offer a company pension scheme.
As a result, more than one in ten older people were at risk of poverty, while more than one in every nine experiences material deprivation.
He said lower paid workers were particularly vulnerable to being unable to save for retirement beyond the state pension.
Dr O’Connor said that housing costs were a growing concern – as more people will be repaying mortgages into their 60s and 70s – as well as facing higher costs for illness and disability.
He said the rate of the state pension needed to be indexed against the real cost of living faced by older people.
He highlighted that Ireland’s current state pension age of 66 is already higher than 27 developed countries with larger populations of older people than in the Republic.
Meanwhile the employers body Ibec urged the government to create a separate state pension fund, with the Social Insurance Fund used solely for “working age benefits”.
The Social Insurance Fund is made up of PSRI contributions underpinning the payment of PRSI-based benefits and pensions.
Ibec Director of Employer Relations Maeve McElwee told the Pensions Commission webinar that a stand-alone pension fund would provide a much clearer “line of sight” for employees as to where their contributions were going, and allow better delineation of working age and pensions policies.
She acknowledged that to offset the increase in pension costs of an aging population over the coming decades, rates of PRSI would have to increase for both employers and employees – but said the balance of those costs should be part of the “holistic” discussion under the Commission on Taxation and Welfare.
She said Ibec also favoured linking the state pension age to life expectancy, and called for recurring research to underpin efforts to maintain a balance in the Social Insurance Fund.
“It would also have to take account of alternative approaches that are not currently supported such as means-testing,” she noted.
Ms. McElwee also highlighted contractual and employment law difficulties in permitting staff to work beyond a fixed retirement age.
Addressing the same webinar, ICTU Social Policy Officer Dr Laura Bambrick said it should be illegal to force a worker to retire an an earlier age than that at which the state pension became available.
She said this would not only benefit individual workers by protecting their incomes, but also the state as employees would be paying PRSI and tax contributions for longer.
She called for the reinstatement of a Pensions Reserve Fund, and said funds raised when the proposed auto-enrolment scheme goes live – which will involve estimated pension contributions of up to 14% of gross salary – should be administered by the state rather than commercial providers.
She also said that workers should not be expected to shoulder all of the shortfall in a pension deficit – and urged the government to align employers social insurance contributions with the EU average among wealthy member states, not a general average.
She also said workers should have the option to defer their pension, and get a bonus higher rate when they eventually drew it down.
Orla O’Connor of the National Women’s Council of Ireland highlighted the particular difficulties facing women under the current pensions framework, and called for thorough “gender proofing” of pension arrangements to ensure that they did not lose out.
The Chair of the Pensions Commission Josephine Feehily said that fairness and equal treatment between and within generations, in recognition of a contributory working life, were important principles for safeguarding state pensions into the future.
“We need to ensure that State Pensions can continue to be the bedrock of the Irish Pension system without ‘squeezing’ other essential areas of Government spending in the future,” she noted.