Tax relief for pension contributions give a disproportionate benefit to high earners, The Irish Congress of Trade Unions (Ictu) said today.
They warned that hundreds of thousands of people are making inadequate provision and face poverty in their old age. And argue that reform of the tax relief system for pension contributions is needed to assist those facing poverty in their old age.
Ictu general secretary David Begg said: "The top 10 per cent of earners earn 40 per cent of the benefits of relief and the cost of tax relief on pensions has escalated. The current arrangement is grossly inequitable and benefits the wealthy disproportionately."
He suggested tax incentives should be capped and the savings redirected to those at the lower end of the scale.
Launching a briefing paper Irish Pensions: Problems & Solutions, Mr Begg noted that barely half of Irish workers have made pension provision. He said employers and employees had to increase contributions to pension funds because reliance on State provision will lead to a "sharp drop" living standards.
He vowed that Congress would make pensions a priority during new partnership talks. The Sustaining Progress deal runs out for most people at the end of the year.
An OECD study last week found that 900,000 people do not have a private or occupational pension out of the workforce of two million.
Mr Fergus Whelan, author of the Ictu briefing paper, said PRSAs has had little impact. The scheme was introduced in September 2003 and aimed at those who are not part of an occupational scheme, the low paid and people outside the workforce.
Mr Whelan said the 70 per cent coverage target by September 2006 was not likely to be met and noted that some non-standard PRSAs were being used for tax planning by top earners.
Ictu's warning follows comments by the Minister for Social and Family Affairs yesterday in which he said eh was considering incentives for people to work beyond the traditional retirement age of 65.
Speaking at the launch of National Pensions Week, Mr Séamus Brennan said: "The reality is that men and women are living longer and leading more active lives in their later years. Working a few years more can make a real difference to income in retirement".
Improvements in lifestyle and medical provision means people are living longer, thereby increasing the pressure on the working population to fund the retired.
Mr Brennan said compulsory pension models would be considered in a Pensions Board review due for completion in September. The review was brought forward from 2006 as there is considerable concern that the public is not taking issue seriously enough.