Mandate disappointed with Government Pensions Framework Decision
Monday 15 March 2010, 04pm
Mandate and the Irish Congress of Trade Unions has expressed serious disappointment with new Government proposals on restructuring Ireland's pension system.
Mandate General Secretary John Douglas says that the new pension’s framework does nothing to help those on low incomes who haven’t got the means or the opportunity to invest in private pensions.
Mr Douglas said, “The Government's plan seeks to maintain the value of the State pension at 35% of average earnings and this is totally inadequate in the eyes of Mandate and its members. Many workers, particularly those in the retail sector, have no private pension system and as such are dependent on the state pension system. This pension’s framework puts pressure on workers to invest in a private pension scheme in order to prepare for retirement, when in reality, workers are already struggling to make ends meet and cannot afford an extra income reduction. Increasing the public pension rate to 50%, rising progressively to 66% would provide Mandate members with an acceptable basic standard of living in retirement.”
The Pension’s Framework envisages a supplementary pension system delivered through the private funds market. It would seem that workers will then be exposed to investment markets without a guaranteed return and must shoulder the high fees and charges characteristic of the industry.
Congress General Secretary David Begg said, "Firstly, they propose to force people to hand over a portion of their wages to the private Pension Industry in order to facilitate gambling and stock market speculation. Given that Irish pension funds - and therefore those who manage them - have been the worst performing in the developed world, this is like a reward for incompetence.
"It is also worth noting that some of the blame for our current financial crisis lies squarely with the foolish investment decisions made by private pension funds....and yet Government proposes to give them even more money. This is wrong.
"The second major failing relates to the absence of any initiative to protect people when a scheme gets into difficulty - a Pension Protection Fund. This is required by EU law and the workers in SR Technics and Waterford Glass are living proof that it is necessary. This is not the response that the crisis in our pension system requires," Mr Begg concluded.
Mandate says that it is also striking that employees are being asked to pay 4% while employers and the State are only giving 2% respectively which would seem to be an unequal burden on ordinary workers.
John Douglas said that while he accepts full participation is essential in preparing financially for retirement, the way the Government's framework is designed works mainly to the benefit of the private pensions industry.
“For Mandate members and people coming close to retirement age, this is very worrying. Particularly considering the disastrous decisions of pension managers, to date, which have led to a significant erosion in pension values.”
The new Framework also intends increasing the retirement age across the board. It is planned to raise the qualifying age for the State pension to 66 in 2014, 67 in 2021 and 68 in 2028 to reflect increases in life expectancy. Mr Douglas says that this again is unfair.
“It does not take into account the different vocations that individuals work in, particularly those who work in manual or physically demanding occupations who will soon be expected to work till 68 years of age. Mandate would much prefer if retirement options were flexible and had a provision for individual choice,” concluded Mr Douglas.
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