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Pension coverage among workers in Ireland is low with only an estimated 41.3% of private sector workers contributing to a supplementary pension. In addition, the system for workplace pensions is considered by many to be unnecessarily complex and beyond the understanding of many workers, without additional advice.
This research aims to look at some areas of pensions that are particularly complex, from a members point of view, and to make suggestions as to how the system could be more member-centred. The research will look specifically at three areas; State support given for pension saving, the structure of pension provision and personalised information given to members.
Tax relief is given on pensions but research indicates that its application and value is very often misunderstood by people. Even those saving for a pension underestimate the value of tax relief. This research will explore how State support could be better understood by members, which may encourage increased saving.
A trust structure allows the member to benefit from having a third party involved, with a legal obligation to act in the best interests of the trust. Large trust based schemes also allow for economies of scale and increased buying power and attract lower costs and charges than any other structure. However this research shows that Ireland has a comparatively large number of small schemes and so members are unlikely to be benefiting as they perhaps could.
Finally, disclosure regulations outline the information member annual benefit statements must contain, however there are views that members are unlikely to read them and even less likely to understand them. Without a reasonable understanding of their likely benefits, it is difficult for members to make informed decisions about their pension provision. This research will look at what information the member should receive and also examines the importance of how that information is structured.
Changes to these three areas, focusing on the members best interests, could have a significant impact on members and prospective members understanding of pensions and encourage engagement and higher coverage in general.
Broderick, M. (2015) Simplifying the complexity of supplementary pensions: Suggestions for member-centred reforms. Masters Dissertatipon, Dublin Institute of Technology.