Facing reality is a key message in the pensions business. Too many workers put off a decision to save for retirement until it is far too late or they satisfy themselves that, by making minimal contributions to a retirement plan, they are on their way to a finally secure old age.
It is the the thankless job of pensions advisers to make members of workplace pensions schemes and individual clients aware that putting off making realistic provision means they will struggle to survive financially after they finish working. Some of them even do so.
It is certainly welcome then, though well past time, for the Minister for Employment and Social Protection, Regina Doherty, to embrace reality and accept that she was so hopelessly behind schedule on her plan to reform what she herself has called an "unfair" way of assessing eligibility for the State pension.
The Minister has been sticking firmly to a target date of the third quarter of 2020 for a long time now. This week, without fanfare or formal announcement, she finally conceded that reform was not now likely to kick in before 2021.
Of course, with an general election taking place in the meantime it could yet be pushed further out. That means the State could be paying inflated pensions to people who have worked for as little as 10 years in Ireland for the rest of their lives.
That looming election could also scupper the current timeline for the introduction of autoenrolment to ensure all workers have some private pension provision. Slightly ahead of State pension reform in the legislative process, it is currently expected to be activated in 2022.
As well as improving the financial position of workers in retirement, autoenrolment should also save the State money on other means-tested welfare supports. That could be critical down the line. At some stage in the future it is likely one of Doherty’s successors will have to wrestle with the reality that the State can no longer afford to fund the pension.
Of course, trying to persuade an electorate who have paid all their lives towards a State pension that it should now be based on means will be interesting politically. Best, maybe, to put that on the long finger.
