CTA - Pensions in Ireland-min

Comments invited from members on State pension consultation process - Feb 2021

The Commission on Pensions in Ireland has launched a four-week public consultation process on the future of State pensions to ensure that the Ireland's pension system can be funded in the future on a fiscally and socially sustainable basis. The Institute will respond to the consultation and welcomes any comments from members. 

Pensions

  In this week’s Public Policy news, read about developments on the future of the Irish State pension, a consultation process on Ireland’s National Recovery and Resilience Plan, and the UK government’s plans to fund businesses across the UK to improve the efficiency of their industrial processes and reduce energy demand. Public consultation launched on future of State pension Pensions were in the news this week, with the Commission on Pensions in Ireland launching a four-week public consultation process on the future of State pensions to ensure that the national pension system can be funded in the future on a fiscally and socially sustainable basis. The Irish Government announced this week that it will delay until at least 2023 the introduction of auto-enrolment, the scheme intended to address the sole reliance by almost 40 percent of workers in the private sector on the state pension to fund their retirement. This announcement was made despite figures released by the CSO showing once again the scale of the pensions challenge facing Ireland. These figures, which show estimate of pension liabilities from 2018, are summarised below: Irish pension schemes had liabilities of €607.9 billion at the end of 2018 State pension schemes account for 59% (€360bn) of the total liability Private pension schemes equated to 21% of the total liability (€99.1bn) The liabilities equate to 186% cent of Irish GDP at that time, compared to 167% when figures were last released for 2015. Commenting for Chartered Accountants Ireland's Public Policy Lead, Cróna Clohisey said: “The lack of private pension provision has been on the agenda of various governments in Ireland over the past 20 years and the only solution the State has given serious consideration is to make people work longer. This approach is simply unsustainable.” Commenting further, Clohisey said that it was not surprising that auto-enrolment has been put on hold, but that the lack of private pension funding isn’t going to be solved without significant action by the Government. The Institute plans to respond to the public consultation on State Pensions and would welcome any comments from members.  These can be emailed to publicpolicy@charteredaccountants.ie. We will continue to monitor developments and bring updates to members. Consultation process opens for Ireland’s National Recovery and Resilience Plan The Minister for Public Expenditure and Reform, Michael McGrath TD has announced a consultation process, which will run until the 22 February, on the development of the National Recovery and Resilience Plan (NRRP) for approval by the EU. This plan will enable Ireland to access funding under the EU’s Recovery and Resilience Facility (RRF), under which Ireland is expected to receive €853 million in grants in 2021, 2022 and, potentially, 2023. The plan is to include reforms and investments to be supported by the RRF that seek to address challenges identified in the relevant Country Specific Recommendations (CSRs) received by Ireland in 2019 and 2020, which arise as part of the European Semester process.  The Minister for Public Expenditure and Reform, Michael McGrath TD has announced a consultation process, which will run until the 22 February, on the development of the National Recovery and Resilience Plan (NRRP) for approval by the EU. This plan will enable Ireland to access funding under the EU’s Recovery and Resilience Facility (RRF), under which Ireland is expected to receive €853 million in grants in 2021, 2022 and, potentially, 2023. The plan is to include reforms and investments to be supported by the RRF that seek to address challenges identified in the relevant Country Specific Recommendations (CSRs) received by Ireland in 2019 and 2020, which arise as part of the European Semester process.  Ireland’s National Reform Programme in 2021 will be integrated into our National Recovery and Resilience Plan and will have a particular focus on green and digital transition, as well as supporting economic recovery and job creation. UK governments to fund heavy industries’ reduction of carbon emissions and energy bills The UK government has this week announced that a total of £289 million will be made available in funding until 2024 to support the government’s mission to ‘build back greener’ from the COVID-19 pandemic impact and support heavy industry as the UK transitions to a low-carbon economy. The grants will be available across England, Wales and Northern Ireland to enable businesses to use new technology to improve the efficiency of industrial processes and reduce energy demand. Grants  will be made available to businesses in energy-intensive sectors, including pharmaceuticals, steel, paper and food and drink through the government’s Industrial Energy Transformation Fund (IETF). The new minimum grant amount of £100,000 for deployment projects is to allow more flexibility for small businesses to receive funding. Applications may be made from Monday 8 March until Wednesday 14 July. Find out more about funding here.   Read all our updates on our Public Policy web centre

Feb 12, 2021
Press release

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. 

Dec 10, 2020