“It remains distinctly odd in the context of the effort to address abysmal pensions coverage in this country, that the Government should conclude that there are too many pension schemes in Ireland. We think there are too few!”
The Association of Pension Trustees of Ireland welcomes the Government’s Roadmap for Pensions Reform. However, the Roadmap is in crucial places misguided. Therefore, the suggested policies will at worst be ineffective and we as a country will end up none the better of. At best, the suggested policy changes will turn out to be unnecessarily costly, in which case we as a country end up getting bad value for money.
It has for some years now been Government wisdom that there are too many pension schemes in Ireland and that a reduction is central to pension reform. To support this view, the reform proposals refer to stats which show that Ireland is home to 50% of pension schemes in Europe.
The problem with the comparison is that the surveyed countries have different ways of counting. Small schemes in the UK are for example not counted at all. But there are other factors contributing to the stats and they are typically rooted in historic differences in national labor markets within which pensions evolved. So, the argument that there are too many pension schemes in Ireland says nothing, other than about the Irish tradition and quirky way of counting.
It is worrying that these statistics are so often cited, in particular since available research seems to suggest that small schemes are really good value. PRSAs provided by the Irish indigenous pensions sector are for example offered at rates considerably lower than those set by Government. Self-Administered ARFs are provided at less than ½ of the price surveyed by the Pensions Council in 2015.
But even if statistics are liable to challenge it remains distinctly odd in the context of the abysmal pensions coverage in this country, that the Government concludes that we have too many pension schemes in Ireland.
In APTI, we are concerned that the issue of the number of schemes speaks of a Government-centric approach to pension reform rooted in regulatory convenience. It is no secret that the pensions regulator has struggled to put in place a meaningful regulatory framework for pensions schemes. Pensioners continue to pay the price for that.
If the Government instead decided to focus on those who do not have supplementary pension to sustain them in old age, the conclusion would inevitably be that there are not too many pension schemes in Ireland, but way too few. In APTI we think that everybody ought to have one.