It is widely acknowledge that we will face a pension crisis if we do not take urgent action.
Pension coverage in Ireland is clearly inadequate, with 47% coverage over and above the State pension and only 35% in the private sector. According to the Department of Employment Affairs and Social Protection, there are 5 people of working age for every person over 65 and by 2045, in less than 30 years, this will have reduced to about 2.1 people working for every person over 65. As the number of pensioners doubles, this will double the cost to the State from €7 billion to €15 billion pa.
At a 2018 Workplace Relations Commission seminar, the Department shared key statistics demonstrating why it needs to urgently bring in pension reform. There are both massive coverage issues and massive income adequacy issues, and the importance of a pension system that is sustainable into the future and capable of helping people have enough to sustain themselves when they retire was highlighted. To achieve this, the government intends to bring changes to pension policy by introducing a new automatic enrolment system. The government have been closely following developments in the UK where auto enrolment was brought in on a phased basis.
In the light of the urgent need for action, the CIPD/IRN 2018 Private sector pay survey sought the HR profession’s views on pension policy choices both this year and last.
In the context of the need to overhaul our pension coverage, 76% of those in the Private sector pay survey agreed or strongly agreed that employers should be required to contribute to a pension scheme, 81% agreed or strongly agreed that employees should be required to contribute, and 80% agreed or strongly agreed that a programme of pension auto enrolment should be introduced in Ireland. Four in five of those surveyed already had some form of pension scheme in place. For those with no pension scheme, nearly half predict that the introduction of auto enrolment would impact future pay increases.
As the voice of the HR and L&D profession, CIPD plans to engage on behalf of members with the government on the proposed pension framework so that we build a more sustainable pensions model across the public and private sectors.
In December 2016, experts from the Department of Social Protection met with the CIPD National Committee to share their examination of private sector pensions as they start the process of exploring options to deal with the future pension crisis that Ireland is facing. Ireland has 47% supplementary pensions coverage rate (35% in private sector) and needs to build a model that can provide adequate and sustainable pension coverage.
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About the CIPD
At the CIPD, we champion better work and working lives. We help organisations to thrive by focusing on their people, supporting economies and society for the future. We lead debate as the voice for everyone wanting a better world of work.