The Irish Association of Pension Funds (IAPF) has called on the Government to establish urgently a review group to simplify the current "pensions morass". The association has started work on proposals for a radical overhaul and simplification of the current pensions regime.
Mr Patrick Burke of the IAPF congratulated the Government on getting the Pensions (Amendment) Bill 2001 passed in the current life of the Dáil.
However, he said saving for retirement needed to be made more simple and attractive.
"How can you expect employees to consider their retirement savings requirements in a pensions environment which offers PRSAs, PRBs, SSASs, ARFs, SSIAs, RACs, CPAs, AVCs and DB and DC occupational pension schemes - each with different taxation structures and separate benefit designs and limitations?"
The chief executive of the Pensions Board, Ms Anne Maher, said its priority was to see how the area could be simplified.
"We discussed this issue when we were working out our strategy for the term and there is clearly a need for making the system more straightforward to help achieve our main aim of increasing private pension coverage."
Mr Burke said that the trend towards defined-contribution schemes meant that the onus had now switched to employees to take much greater responsibility in ensuring that they were saving enough to retire to a lifestyle that they expected.
"The effect of a switch to a defined-contribution environment is to increase the adequacy and investment risks facing employees. Employees will have to become more aware of how much money they need to have saved by their retirement age to allow them to live the retirement lifestyle that they hope to have.
"They will need to know how much they should be investing in their pension fund each month and how much they can expect that to grow by depending upon the investment fund options that they select."
He called on the Departments of Finance and Social, Community and Family Affairs to establish a review group urgently to develop this critical aspect of the pensions agenda.
Mr Burke said that many detailed provisions of the Pensions Bill improved the security and protection of those employees who have pension benefits provided by employer-sponsored occupational pension schemes.
He warned, however, that as with most regulatory provision there will be costs associated with the improvements introduced in the Bill and the IAPF believes that in the short term these costs will be borne by the employers who sponsor the pension plans affected.
However, in the longer term the IAPF suggests that the balance will shift to the detriment of employees as employers choose to establish or facilitate pension structures with less regulatory burdens and more directly controllable and predictable costs.
"The IAPF believes that the State, employee and employer representatives and all those involved in the pensions industry must take dramatic steps now to simplify our pensions system before it is too late and we confine large numbers of our population to a retirement poverty which they never expected."
