Concerted action required in 2021 to have any hope of getting pensions roadmap back on track

Dec 10, 2020

A renewed commitment must be made by government to the long-awaited reform of Ireland’s pension system in 2021, according to Chartered Accountants Ireland. The Institute’s comments come as legislation was debated in the Dáil last night, halting the increase in the State pension age to 67.  

This legislation ensures that the State pension age remains at 66 until the work of the Pensions Commission concludes, which is expected by the end of June 2021. This comes a week after the Irish Fiscal Advisory Council (IFAC) estimated that the additional cost of providing for new pensioners (public sector and social welfare recipients), will be €370m a year between 2021 and 2025.  

Commenting, Cróna Clohisey, Public Policy Lead, Chartered Accountants Ireland said 

“Understandably, pension reform slipped off the agenda in 2020. A global pandemic and the conclusion of the Brexit transition period have dominated the minds of policymakers and preoccupied businesses simply trying to stay afloat. 

“The need for pension reform has not dissipated though, and as we move into 2021, and economic forecasts start to look slightly brighter, attention must return to it. Political minds today are focused on the state pension age, but the reality is that the state pension in its current form may not even be sustainable in the decades to come.  

“A long-term, consistent approach is needed from government, one that will be adhered to and from which we will start to see a sustainable system of retirement planning emerge in Ireland.  The work of the Pensions Commission must result in a clear policy on the State pension age. Workers planning or approaching their retirement need reassurance and greater certainty on this issue so that they can plan adequately and responsibly. 

“The figures are already failing to add up, in that the numbers of workers to support those retired is on a downward trajectory, and this needs to be addressed in a sustainable way in 2021.” 

Chartered Accountants Ireland made this call to action today as it launched a new publication on retirement planning, A Practical Guide to Pensions and Life Insurance. The publication provides accountants, tax advisors and other financial advisors who provide financial planning advice with a practical resource to help individuals and businesses plan for retirement.  

Commenting, the publication’s author, chartered accountant Simon Shirley said 

“Pensions exist so we can afford to stop working one day and should be one of our most important financial assets at retirement. They are also without doubt the most tax-efficient and effective way of saving in a sustained low-interest rate environment. 

“Although the basic concept of pension planning makes sense, terms like ‘investment risk’, ‘volatility profile’ and ‘cash and cash equivalents’ often induce the ‘glaze’ that all pension advisors recognise.  

“We have to tackle a deep-rooted lack of understanding and demonstrate the importance of prioritising long-term provision over often important short and medium-term needs. Over 50% of the Irish workforce do not have a personal or employer offered pension plan, so the task is considerable. The more you know, however, the better positioned you will be to take advantage of pensions for your personal benefit and, in the case of advisors, for the benefit of your clients.”  

ENDS  

 

Publication details: 

A Practical Guide to Pensions and Life Insurance 

Publisher: Chartered Accountants Ireland 

Publication date: 10 December 2010 

ISBN: 978-1-912350-95-7 

184 pages  

Price: €25.00 / £22.50 

  

The Author 

Simon Shirley is a Fellow of Chartered Accountants Ireland, a Revenue-approved pensioneer trustee and the founder of the financial advisory firm Simon Shirley Advisors.