National Pensions Framework a step in the right direction – Deloitte

The National Pensions Framework is a welcome contribution to one of the most important long-term issues faced by the State, the increased ageing of our population over the next 40 years. While the proposals may not be welcomed universally, they successfully address the areas of greatest pension need within our society and economy.

Commenting on some of the key points, Ian Mitchell, Managing Director of Deloitte Pensions and Investments, said:

Progressive raising of the age of retirement to 68 by 2029
“The proposed change is consistent with developments made in other jurisdictions across the world. In Denmark and the US, for example, there are plans to raise the minimum retirement age to 67, while the UK plans to increase it to 68. Given that people are thankfully living a lot longer, the move is not unexpected.”

New Auto-Enrolment Pension Scheme
“This is a welcome initiative from the government, and whilst the provided opt-out mechanism is somewhat complex, it will be welcomed by many at various points in their working life.

“It is to be hoped that the introduction of this scheme does not negatively affect employer attitudes to any existing Defined Contribution pension provision where a higher employer contribution rate may currently apply, and the document makes reference to this potential issue, expressing strongly the hope that all current schemes will remain in their current structure.”

New rate of tax relief at 33%
“It is to be hoped that when looking at this proposed legislation further, the Government will give consideration to the potential negative impact on pension planning created by a system where an individual pays potentially more tax (41%) on her or his post pension income than they are allowed to shelter (33%) when making the decision to defer a portion of their income by placing it into a pension plan. The principle of ‘the same tax rate as you go in, as you go out’ is an important one to maintain.

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