National Pensions
Framework
March 2010
AGENDA
• Background
• Aims
• Principles
• Key Areas
• Observations and Conclusions
...
BACKGROUND
• First Pensions Review
 Late 80’s
 Pensions Act
• Second Pension Review – NPPI
 Late ...
BACKGROUND
• Pensions Green Paper - 2006
• Mandatory Pension Paper - 2007
• Commission on Taxation Report – 2009...
AIMS
• Security
• Equity
• Choice
• Clarity
• Increase Coverage (low and Middle
Incomes)
• Ensure State S...
PRINCIPLES
• Affordable and Sustainable
• State Pension at 35% of Average Weekly
Earnings
• Improve both covera...
AUTO ENROLMENT
• Implementation date 2014
• State managed scheme
• compulsory contributions equivalent to 8% of
gross p...
AUTO ENROLMENT
• Contribution triggered if earnings exceed
threshold
• Example given:
Trigger at €357 per week
...
AUTO ENROLMENT
The table is based on the following assumptions: 5% earnings growth; 7% investment returns; 22:1 annuit...
AUTO ENROLMENT
• Opt out after 3 months
• Irrevocable after 6 months
• Auto-renewal every 2 years – hassle for
emplo...
AUTO ENROLMENT
• Members are given a limited range of funds.
• Funds are private sector chosen by competition.
• Exemp...
AUTO ENROLMENT
Australian Experience
• Introduced in 1992: to answer same issues
• “resistance crumbled”
• 9% and enjoy...
AUTO ENROLMENT
2006 Green Paper
• Predicted negative impact on GDP and GNP
• Reduction in real disposable income
• Impact ...
STATE PENSION
• Social Insurance Fund decimated
• Retirement age to increase gradually to 68
• Contributory pension ba...
PRIVATE SECTOR
• 33% Rate on Personal Contributions
• DC Retirement Benefits Simplified
• Multiplicity of Contract...
33% RATE
• Applies to all personal contributions
 To achieve greater equity?
• 15%- 40% limits remain
•...
BENEFITS
• ARFS – available to all DC
 Not to current Pensioners; DB
 Implemented 2011
• Specified I...
DEFINED BENEFITS
• Possible new model
• Fixed Contribution Rates
• Flexible Benefits
• Allow for Life Expectancy
...
PENSION BOARD
• Powers to be reviewed
• Powers re Lifestyling
• Licensing of Schemes
• Info to Members
...
PUBLIC SECTOR
• New Scheme
 New entrants only
 Across all public and civil servants
 Legislation ...
PUBLIC SECTOR
• Contributions at 6.5%
 On all pensionable income
• Fast accrual
 Remains for Guards,...
Miscellaneous
• Flexible Working
 State pension age to rise to 68
• Tracing benefits
 Tracing mechan...
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National Pensions Framework Seminar

Published on: Mar 3, 2016
Published in: Economy & Finance      Business      
Source: www.slideshare.net


Transcripts - National Pensions Framework Seminar

  • 1. National Pensions Framework March 2010
  • 2. AGENDA • Background • Aims • Principles • Key Areas • Observations and Conclusions 2
  • 3. BACKGROUND • First Pensions Review  Late 80’s  Pensions Act • Second Pension Review – NPPI  Late 90’s  PRSAs • Third Pensions Review – NPF  2010  ? 3
  • 4. BACKGROUND • Pensions Green Paper - 2006 • Mandatory Pension Paper - 2007 • Commission on Taxation Report – 2009 • McCarthy Report – 2009  Public Sector pensions • Renewed Programme for Government – 2009  33% tax rate 4
  • 5. AIMS • Security • Equity • Choice • Clarity • Increase Coverage (low and Middle Incomes) • Ensure State Support is Equitable and Sustainable 5
  • 6. PRINCIPLES • Affordable and Sustainable • State Pension at 35% of Average Weekly Earnings • Improve both coverage and contributions • Equitable Tax incentives • Involve Employers, Employees and State • Support longer working by flexibility • Focus on Future; ignore Legacy issues 6
  • 7. AUTO ENROLMENT • Implementation date 2014 • State managed scheme • compulsory contributions equivalent to 8% of gross pay • Employee pays 4% from net pay • State pays 2% and employer pays 2% • Wage bills up 2% plus administration costs 7
  • 8. AUTO ENROLMENT • Contribution triggered if earnings exceed threshold • Example given: Trigger at €357 per week 8% of salary between €127 p.w. and €995 p.w. 8
  • 9. AUTO ENROLMENT The table is based on the following assumptions: 5% earnings growth; 7% investment returns; 22:1 annuity for pension; a 40 year employment career. These are reasonable assumptions over a 40 year period. 9
  • 10. AUTO ENROLMENT • Opt out after 3 months • Irrevocable after 6 months • Auto-renewal every 2 years – hassle for employers • Incentive - once off bonus payment after 5 years. 10
  • 11. AUTO ENROLMENT • Members are given a limited range of funds. • Funds are private sector chosen by competition. • Exemption for those in an employers defined contribution scheme which provides for the 8% contribution and the 2% employer’s portion. • The alternative funds available may be more attractive than the auto-funds. 11
  • 12. AUTO ENROLMENT Australian Experience • Introduced in 1992: to answer same issues • “resistance crumbled” • 9% and enjoys wide support • Employer contributes to scheme of employees choice • Several different types of arrangement – general and self administered 12
  • 13. AUTO ENROLMENT 2006 Green Paper • Predicted negative impact on GDP and GNP • Reduction in real disposable income • Impact on competitiveness • Savings would increase Government says: • 2014 only if economic conditions permit • It is conscious of cost to small firms • “the implementation of these proposals will be cognisant of the current and emerging economic situation” 13
  • 14. STATE PENSION • Social Insurance Fund decimated • Retirement age to increase gradually to 68 • Contributory pension based on total contributions made (currently average) • Home Carers to be recognised with credits • No credits for legacy issues (i.e. marriage bar) 14
  • 15. PRIVATE SECTOR • 33% Rate on Personal Contributions • DC Retirement Benefits Simplified • Multiplicity of Contracts to be reviewed  PRSAs, Personal Pensions, Buy-out Bonds • Defined Benefit Schemes  New model proposed • Pension Board  Powers to be reviewed • Info to Members; Funding Standard  Kept Under review 15
  • 16. 33% RATE • Applies to all personal contributions  To achieve greater equity? • 15%- 40% limits remain • €150,000 limit remains • Employer Contributions Unaffected • Pension Funds Remain Exempt 16
  • 17. BENEFITS • ARFS – available to all DC  Not to current Pensioners; DB  Implemented 2011 • Specified Income  To c. €18k  AMRF to end before 75 if this is exceeded • Tax Free Lump Sum same as Before  Taxation above €200k to be considered during implementation  25% or 1.5 x Salary? 17
  • 18. DEFINED BENEFITS • Possible new model • Fixed Contribution Rates • Flexible Benefits • Allow for Life Expectancy • All beneficiaries Revised Annually and Equally • Previous Underpayment due to Poor Investment to be caught up 18
  • 19. PENSION BOARD • Powers to be reviewed • Powers re Lifestyling • Licensing of Schemes • Info to Members  To be kept under review • Funding standard  To be kept under review 19
  • 20. PUBLIC SECTOR • New Scheme  New entrants only  Across all public and civil servants  Legislation by end 2010 • Benefits  in line with Private sector  Integrated with Social Welfare  Based on Career Earnings  Annual Accrual Rate  NRA 66 - 70 20
  • 21. PUBLIC SECTOR • Contributions at 6.5%  On all pensionable income • Fast accrual  Remains for Guards, Army  Added Years gone • Applies to TDs, Judges, President  in line with Private sector  Based on Career Earnings • Possible CPI for Existing Pensioners 21
  • 22. Miscellaneous • Flexible Working  State pension age to rise to 68 • Tracing benefits  Tracing mechanism  Possible Dormant pensions Fund • Financial Education  By the Banks!!  6 months Reports from IBF on Progress 22

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