Hanafin moves to address employers' pension fears
The Minister for Social and Family Affairs Mary Hanafin has moved to assuage employers' fears over the new National Pension Framework saying that its implementation could be pushed beyond 2014 if economic conditions remain poor.
The new framework announced yesterday raises the retirement age and will enrol every worker in a pension scheme to which their employer and the State will also make a contribution.
Under the plans, the State pension age will rise to 66 in 2014, to 67 in 2021 and finally to 68 in 18 years time
The Government is also bringing in a new supplementary publicly-run pension scheme for workers who are not covered by a private work pension.
Anyone aged over 22 years will be automatically enrolled and will pay extra contributions through their PRSI, which will be matched by their employer and the State.
Employees will have to pay 4% of their wages – within yet-to-be-decided upper and lower thresholds. The Government will then contribute €2 and the employer €2 for every €4 saved by the worker.
But concerns have been raised by business groups who say employers could have to cut pay in order to meet their pension obligations.
"Mandatory employer pension provision will fuel wage demands, particularly in labour intensive industries and small employers," Brendan McGinty of IBEC said. "These are businesses already struggling to survive."
Minister Hanafin said today she understands the financial concerns facing businesses, and they form part of the reason that the plan is being implemented over a four-year timeframe.
"The economics of the country at the moment are just not appropriate for introducing an extra burden on employers," Minister Hanafin said. "And that's why we have put it out to 2014."
"But we're also saying that if the prevailing economic conditions at that time are not good, well then we'll extend it a bit longer - and that's what has happened in the UK. They were due to bring it in in 2012 and have decided to push it back a little further."
