Madam, - There is a great deal of debate in the run-up to the election about occupational pensions. May I suggest a very simple solution?
Employees without occupational pensions should be allowed to make "top-up" payments to their PRSI contributions. The value of these extra contributions could be paid on top of the statutory old age pension on retirement and also provide for a statutory tax-free lump sum, just like private AVCs.
The scheme would be easily transportable from job to job. Basically, the pension would follow the PPS number, promoting labour market flexibility along the lines of the EU "flexisecurity" model.
The PRSI payments would receive tax relief at the same level as private pension contributions and would go into the National Pension Fund. No commission or fees would have to be paid to private brokers or insurance companies.
Rates of return could be based on the average return for the private sector pensions industry during the previous financial year. That way, the State scheme could not be said to have any advantage over the private sector.
As an incentive for savers, such contributions could trigger a matching contribution from the employer and the Exchequer respectively. If an employer pleaded inability to pay, his claim could be examined in the same way as any other "inability to pay" claim under national wage agreements. In the event of the employer proving poverty, the employer contribution would be funded through the general employers' PRSI contributions.
If employees faced difficulties activating the system due to hostility from their employer, they should be able to do so through their trade union or the Pensions Ombudsman. I think this comes under the heading of "action", rather than "auction", politics. - Yours, etc,
PADRAIG YEATES, Balkill Road, Howth, Dublin 13.