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Providing for Pensions

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The Minister's concern about the poor uptake of pensions should be seen in the context that all workers are already contributing over 20% of their income tax to pensions. Unfortunately, it is not always for their own pensions. About half their contributions pay the "gold-plated" pensions of public servants and politicians, and the balance is hoovered up by the National Pension Reserve Fund. This assessment takes no account of tax relief granted to the wealthy self employed to create massive pension funds used for estate planning.

The following suggestions would put fairness into national pension arrangements and help resolve the looming pensions crisis:

  1. The next round of benchmarking should take full account of the cost and value of public sector pensions. This means that staff should be given the option of maintaining current pension rights with salary reductions to cover the full cost of entitlements, or of holding current salary levels and funding their own pensions on a discretionary basis. In addition, the State should progressively introduce self-funded schemes for all its employees.
  2. There should be a cap of, say, a million euro on the value of tax-deductable contributions to a pension fund for any individual.
  3. State organisations with pension deficits, amounting to a billion euro, should be required to sort these out internally and not be baled out by the taxpayer and by raising prices to consumers.
  4. The role of the National Pension Reserve Fund should be clarified as regards the expected distributions between public sector and social welfare pensions. Indeed, a fundamental reassessment of this organisation should be conducted in the context of our surging population and given that invests over a billion euro a year aboard while the State has a deficit in infrastructural funding.
  5. As TDs and Ministers are amongst the best paid and, probably best pensioned, in the world, they should fund their own pensions over and above a basic scheme. The sums involved are not large but there is a principle involved and a lead to be given.

This prescription is likely to be painful but, as everyone knows, it is better to start pension planning earlier rather than later. So, before introducing mandatory pensions, the Government should create an equitable starting point.

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This page contains a single entry by Brian published on September 23, 2005 2:43 PM.

Privatising Healthcare was the previous entry in this blog.

Dail Productivity is the next entry in this blog.

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