A little bit on pensions… February 15, 2013Posted by WorldbyStorm in Economy, Irish Politics.
You know, reading about the debate where Brendan McGinty of IBEC is reported as calling for adjustments in pensions of public sector workers and in particular the following:
At a debate last night, Ibec’s director of industrial relations at Brendan McGinty described public sector pensions as the “elephant in the room” at a time when private sector pensions were being “decimated”.
…it’s difficult not to wonder at the response from Jack O’Connor of SIPTU. What did he say?
SIPTU General President Jack O’Connor has responded strongly to a statement reported to have been made tonight by Brendan McGinty, Director of HR and IR Services at IBEC. Mr McGinty is reported to have called for the withholding of increments due to public servants, and for the cutting of pensions of people “who have spent their lives working in the public service”, Mr O’Connor said. “Mr McGinty has missed another opportunity to do something useful by keeping his mouth shut as very sensitive and difficult negotiations, in which his organisation is not involved, proceed precariously”. ”Mr McGinty represents the most feather-bedded employer class in Western Europe, buoyed up as they are, by a corporate tax regime that his contemporaries across the Continent would give their eye teeth for, and which is subsidised by the Irish taxpayer. ”This is the same Mr McGinty whose organisation includes in its ranks the set of banking institutions which have distinguished themselves by bringing about the biggest financial collapse, proportionately speaking, in the developed world since the Wall Street Crash, for which our citizens will be paying for the next number of generations. ”Tonight’s statement is a shameful and despicable attempt to scapegoat working people who have rendered good service and paid their taxes, and already shouldered pay cuts averaging 14 per cent, as well as additional cuts in their income for a crisis caused by a number affiliates of Mr McGinty’s organisation. ”With regard to pensions, what is wrong in Ireland is not that people in the public service have pensions but rather that, thanks to the efforts of Mr McGinty and his organisation, more than half of those who go to work in Ireland every day have no occupational pension at all.”
That’s true, but that’s not quite addressing the point as regards pensions.
And there IBEC is on enormously shaky ground.
For its colleague in private sector representative organisations, the Irish Insurance Federation, in its submission to the Green Paper on Pensions in 2007 explicitly was against ideas such as ‘mandatory pensions’ for all citizens.
Here was the IIF’s contribution:
* We do not support the idea of mandatory pensions. The introduction of fully mandatory pensions would create more problems than it would solve. There would be a high degree of complexity involved and it would be very difficult if not impossible to design a regime which would be appropriate for all participants. In our opinion the better option is a reasonable basic State pension and voluntary provision on top of this.
* Why not mandatory? Because: o Enhancing the “Pillar 1” State pension, as recommended, would go a long way towards providing an adequate retirement income for low- to middle-income earners; this in turn reinforces the idea that any additional pension provision – while it should be promoted and incentivised by the State – should remain voluntary; o It represents an abdication of personal responsibility and it weakens the link between effort and reward; o It removes personal choice; o It enshrines the principle that citizens must be taken care of by the State from ‘Cradle to Grave’ and increases ‘Big Government’; o It creates a dilemma regarding who should manage funds and may result in a lack of individual savers’ control over the management of their retirement funds.
Did IBEC differ from this analysis? Not a bit of it. Indeed quite the opposite – in its submission to the Green Paper its language may not be as super-heated as the IIF, but the reasoning runs largely in parallel to it:
IBEC is not in favour of mandatory employer contributions and is against the idea of auto enrolment for the following reasons:
1. Auto enrolment forces people to save where they may already prefer to provide for their pensions through alternative means.
2. It absolves the State largely of the responsibility of funding pensions for the population cohort on the edge of the lower income to middle-income groups.
3. By forcing people in lower income brackets to save for a pension it reduces their potential to provide mortgage repayments and reduces their choice in how they use their disposable income.
4. Forcing employees to provide for their own pensions indirectly raises the cost of labour as the demand for wage compensation to subsume the pension savings will invariably follow.
5. Any further cost pressure costs on employers in the current and foreseeable economic environment would only serve to undermine competitiveness.
And it concludes:
Overall, IBEC is against radical change to the current system without clear and compelling reasons for so doing.
Now the landscape on pension provision has changed somewhat but throughout the last four years IBEC has been consistent in its opposition to mandatory or universal pensions.
Which makes its complaints about the situation vis a vis PS pensions essentially concern trolling on a grand scale, because for all the hand-wringing over private sector pensions being ’decimated’ what IBEC argues for is the stripping away of pension provision for public sector workers, but nothing at all to ensure that there is a universal proper pension provision for all workers that would replace that. Or rather in essence it wants even even more to depend upon the current level of state pension provision which is in effect the state taking up the slack.
There’s a term for that, but – perhaps fortunately – I can’t quite recall what it is…