FAR from empowering pensioners, the Minister for Finance, Mr McCreevy, could end up impoverishing many as a result of new changes outlined in the Finance Bill, the Irish Association of Pension Funds (IAPF) has said.
Speaking at the association's annual dinner last night, IAPF chairman Mr Paul O'Faherty said it was surprising that Mr McCreevy had advanced his own personal solution to pensions with little or no opportunity for debate.
In doing so, he had bypassed the National Pensions Policy Initiative which was established by the Government, he said.
The association, which represents the interests of pension scheme members, trustees and sponsoring employers, said it was not against change and it agreed with the Minister that the current system was much too rigid. But it also believes the Government's proposals go too far by introducing flexibility at the expense of the security of the majority of ordinary people. "Quick fixes in the pensions area are dangerous and we will live to regret them," Mr O'Faherty said.
The IAPF proposes that the Government, in conjunction with the Pensions Board, prepare a Green Paper on the use of pensions savings within a six-month time scale.
The most controversial element of the new proposals relates to the purchase of annuities. Mr McCreevy has outlined plans to abolish the compulsory purchase of annuities by the self-employed and owner directors. Provided at least £50,000 is invested in an approved minimum retirement fund (AMRF), the self-employed should be allowed to decide how to invest the balance of their retirement funds.
The move has been welcomed by many self-employed people and independent financial advisers as well as bodies like the Consumers Association of Ireland and the Irish Insurance Federation.
Many of those in favour of the proposals believe that people are entitled to more choice over what to do with their pension savings and they do not need to be protected from themselves.
"It is not nannying to be concerned that many pensioners will fall victim to poor advice; it is not nannying to worry that funds will run out for some pensioners; it is not nannying to worry that others will be afraid to dip into their retirement capital and it is not nannying to look for answers to reasonable questions," Mr O'Faherty said.
