The Association of Pension Trustees of Ireland has attacked the government for launching a consultation on what it calls “yet another” pension structure, when what needs to be done is to simplify and bring clarity to what has become an “unnecessarily complex” system.

The APTI is criticising the Department of Social Protection’s proposed consultation — “to add to the many permutations already in place” – which will be on the issue of automatic enrolment in a pension scheme for all employees.

APTI chairman Tommy Nielsen  (pictured) said: “Many, many rules were created, not as part of a government plan – there wasn’t any — but mainly by Revenue, and more often than not for the purpose of protecting the Exchequer every time one supposed tax loop-hole or another appeared.”

Of the latest consultation, he added: “It is another tactic to deflect from what really needs to be done. All the while what we really need, simplification, does not appear high on the agenda. The current system can accommodate auto-enrolment and this new vehicle is simply a distraction.  

“It will also allow us to be distracted from the necessity for pensions simplification. So far, simplification efforts have been reduced to platitudes like ‘there are too many pension schemes in Ireland’ – which, with only 41% of the private sector workforce covered, is a strange attitude.”

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The APTI instead proposed five steps to pension simplification: 

1. An auto-enrolment vehicle was already created in 2002 — it’s called a PRSA. It wouldn’t take much to make contributions compulsory and cap charges on such PRSAs, yielding an immediate route to auto-enrolment
2. Change the practice, dictated by Revenue, whereby Approved Retirement Funds (ARF) must be run as separate vehicles, which is an unnecessary complexity.
3. Discontinue the PRSA-post-age-75. PRSAs-post-age-75 cannot be accessed by the pensioner but are still taxable. PRSAs however can be paid out at age 75, and if that interpretation was promoted, Revenue would get the tax; the pensioner would get the income, and there would be one less pension structure.
4. Instead of setting up occupational schemes as one scheme, at a minimum, per employer, adopt the UK approach of making occupational schemes into master trusts, in effect clubbing all the efforts of service providers under the one umbrella, reducing the cost.
5. Eliminate insured pensions, also known as personal pensions, and introduce legislation to turn them into PRSAs. As a rule, they are expensive and have few consumer protection measures in place, so charges are generally high.