Pension age ‘should not rise unless auto-enrolment system in place’

A pension plan helps ensure retirement is financially secure.

Charlie Weston Twitter Email

March 19 2021 01:00 PM

The State pension age should not be changed without bringing in a scheme for the almost one million workers who do not have a works-based retirement plan or a private pension, according to Chartered Accountants Ireland.

In a submission to the State’s Pensions Commission the accountants said 10 years’ notice should be given to workers before there is any rise in the pension age.

The present and previous Governments have continually put back the introduction of an auto-enrolment pension scheme, which has been promised for years now.

Chartered Accountants Ireland’s public policy lead Cróna Clohisey said there has to be parallel moves to increase pensions coverage before there is any move to change the State pension age.

This is because the absence of a coordinated approach to reform would create a risk of workers living their retirement in poverty in the absence of a coordinated approach to reform.

The State pension age was due to increase from 66 to 67 this January.

It was then planned to rise to 68 in 2028.

But the issue because a huge one in last year’s general election.

This forced the Government to defer the rise in the age people get their State pension, pending a report from the recently-formed Pensions Commission.

A survey of members of the accountancy body found that 93pc support the introduction of auto-enrolment.

Under the proposed scheme workers would automatically be enrolled in a pension scheme, with contributions by employers, employees, and the State.

Ms Clohisey said: “The cost of the State pension will inevitably increase, and the scale of the pension funding problem will only grow unless more people start to save for a pension while they are earning.

“Introducing auto-enrolment is the obvious answer to what is now a huge problem. This scheme will incentivise people to save and that in turn will reduce the reliance on the State pension.”

Moves were taken years ago to raise the pension age as the population is beginning to age, with a fear that fewer workers compared with the numbers in retirement would make the State pension financially unsustainable.

Chartered Accountants Ireland said that requiring people to work for longer cannot be the only option the State considers.

It said in its submission that the pension age should not increase beyond the current 66 years, and 10 years’ notice should be given to workers for future planned increases.

A clear and coherent strategy with adequate lead-in time for any changes is necessary to allow workers to plan for the long-term, it argues.