Irish Small and Medium Enterprises are backing a legal initiative to create an equitable system for private sector pensions.
In a statement, the association said they’re seeking to put an end to “tax discrimination against private sector workers in the treatment of their pensions compared to the treatment afforded to public sector workers with their pensions.”
ISME wish to ensure that private sector workers are not penalised for saving into a pension pot, to allow private sector workers to save as much as they feel appropriate, to create an incentive for workers to save money for their pension and to minimise the burden of society caused by the pension deficit.
CEO of the organisation, Neil McDonnell said “There is currently a twin-track approach to pensions in Ireland where those who work in the private sector cannot avail of supports from the State, while those working in the public sector do. Tax relief on private sector pension savings is tax-deferred. It is not tax avoided. We now have a great opportunity to fix this anomaly and to ensure that all workers are entitled to the same rights when it comes to pensions.”
ISME is in discussion with interested parties to bring a test case to the High Court and have invited individuals with an interest in the area to participate in the test.
Meanwhile, a survey published today revealed that 1 in 4 people are not contributing to pension schemes set up by their employer.
The survey, which was carried out by Aon Solutions, included 120 Defined Contribution schemes in Ireland, representing over 117,000 employees and in excess of €4.75 billion of assets.
It revealed that 6 in 10 Defined Contribution schemes are ‘unprepared’ for auto-enrolment.
It has also found the schemes are struggling to keep pace with the rate of change in the pensions marketplace.
Chief Executive of Aon Solutions, Rachael Ingle, said the findings are a “real concern”.
“As the COVID-19 pandemic evolves and its implications on savings and investments become clear, it will become increasingly important for pension schemes to find ways to provide robust governance structures that deliver results while connecting more effectively with employees to ensure financial wellbeing in older age is achieved.
“From encouraging members to maximise both their own and their employer’s contributions, to educating them about investment and retirement considerations, it is critical for employers, trustees and employees to take action now in order to plan for the future.”