Union officials yesterday backed a proposal to introduce mandatory pension contributions and accused the Department of Finance of stifling debate on a potential pensions crisis by ruling out the plan.
Plans drawn up by the Pensions Board for Minister for Social and Family Affairs Séamus Brennan envisage employees and employers making combined mandatory pension contributions of up to 10 per cent of relevant earnings.
The Government would also contribute 5 per cent, in lieu of tax relief, leading to projections that the scheme could cost the Exchequer as much as €3 billion a year.
The finance department and business lobby group Ibec both oppose the pension scheme.
"Department of Finance officials have no business lining up with employers to throw cold water on these proposals, which aim to provide a happy and secure retirement for tens of thousands of women and low-paid workers," said Peter McLoone, president of the Irish Congress of Trade Unions.
"This is an attempt by Finance to stifle the debate before people have a chance to understand the cost and benefits of what is being proposed. They should back off and allow this matter of serious public interest to be considered without spin and propaganda."
SIPTU, the State's largest union with more than 260,000 members, said that while details of the mandatory pension proposal require further examination, the plan is the only way forward in principle.
"The longer we pussy foot around the issue, the bigger the problem will become and the harder it will be to resolve," said Jack O'Connor, president of SIPTU. "There is no prospect of the pensions deficit being addressed voluntarily because, unfortunately, there is a large element among employers who will not contribute to pensions on a voluntary basis."
Small business lobby Isme said it strongly objects to the Pensions Board's proposals because mandatory contributions from employers are a non-runner.
"This latest suggestion will impose further costs on small companies, would lead to an increased burden at a time when Irish labour costs are already increasing at twice the level of our European counterparts," said Jim Curran, head of research at Isme.
Most employees are unwilling to contribute to their own pensions, Mr Curran said, citing a disappointing take-up of Personal Retirement Savings Accounts (PRSAs). The majority of small enterprises, meanwhile, cannot afford to make a contribution to their employees' pensions, unlike large corporations.
Isme recommended the Government instead introduce a national initiative that would encourage employees to save and provide for their own retirement.
The Irish Senior Citizens Parliament came out in favour of mandatory pension contributions after meeting with pensioners in Dublin yesterday. If the proposal is not introduced, current and future generations of pensioners will be condemned to poverty, according to Michael O'Halloran, chief executive of the senior citizens parliament.
The Pension Board's suggestion of increasing the basic State pension to 40 per cent of average earnings from a current 33 per cent was welcomed by the Society of Actuaries in Ireland. The society intends to survey its members, many of whom work in the pensions and life assurance sector, on their view of a mandatory pension scheme.
The Green Party, which introduced its policy document on pensions yesterday, said it was in favour of a "soft mandatory approach" in an attempt to increase the State pension to 60 per cent of average earnings.
The party's pension proposal is modelled on a UK White Paper proposal that would see people who do not belong to a workplace scheme automatically enrolled to a plan whereby employees would contribute 4 per cent of their salary, employers 3 per cent, and the Government would pay 1 per cent.
