National Pensions Framework

Contact: Irene Goldrick
Tel: +353 1 411 8189

Mercer Press Statement - National Pensions Framework - Ireland

Ireland , Dublin



Mercer welcomes the release of the National Pensions Framework, bringing much-needed clarity to the future of the Irish occupational, private, state and public service pension systems.  We particularly welcome the renewed commitment to retain a Irish state pension of 35% of average earnings, as the cornerstone of the overall system.


The Government has chosen a so-called “soft mandatory” option to achieve its objective of improving pension coverage.  This is a matter for public policy, but Mercer had been concerned that any such move had the potential to cut across, and potentially damage, existing pension schemes.  We therefore welcome the proposal that existing pension scheme members will not be required to participate in the new system.  The proposed auto-enrolment system should go some way towards addressing low retirement saving levels among non-pensionable employees. Considerable thought will need to be given to the efficient and equitable workings of the auto-enrolment plan, which with its mooted contribution rates and thresholds should be seen as a minimum rather than a target system for accumulating retirement savings.


The proposed increases to the State pension age are consistent with similar increases in other countries and are inevitable given improvements in life expectancy and the need to ensure the sustainability of our pension system.  We believe that legislation should also allow defined benefit schemes to adjust the age from which benefits are payable in line with increases in the State pension age.  This would help to alleviate the current funding problems being experienced by such schemes, of which increases in life expectancy have been a significant contributory factor.  Similarly, consideration should be given to increasing the age from which pensions are paid to existing, as well as new, public sector workers.


Mercer welcomes the imaginative proposal included in the Framework to enable defined benefit schemes to restructure.  However, clarity is required urgently  as to the status of this proposal and the timeline for its implementation.  80% of defined benefit schemes currently do not meet the statutory minimum funding standard and have to submit a funding proposal to the Pensions Board either by 30 June or before the end of the year.   They need to know the basis on which this proposal will be available to them.  We will be calling on the Pensions Board to extend the current deadlines for submission of funding proposals to allow schemes to take account of this and other aspects of the Framework.


It is unfortunate that government continues to propose limitation of tax relief on individual pension contributions to 33%. Individuals paying the higher rate of income tax in retirement will effectively be subject to double taxation when they take their pension benefits.  This step is inconsistent with the overall aim of encouraging saving for retirement and with the rest of the Framework document. If the 33% limitation on relief is to be implemented, government should also give consideration to limiting the tax rate applicable to drawdown from ARFs and annuities.


We welcome the opening of the ARF option to members of defined contribution pension schemes. This should, unlike the limitation on tax relief, act as an incentive towards retirement saving.


Implementation of the policies set forward in the National Pensions Framework will require much additional work and consideration. This however needs to take place in a timely manner, given the current and pressing difficulties faced by pension schemes, contributing employers and scheme members.


Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and investment management. Mercer’s 19,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com













Press Contacts:

Irene Goldrick

353 1 411 8189


Michael Madden

353 1 411 8422



Danny Mansergh, Senior Portfolio Planner with Mercer discusses the highlights as well as areas of concern with regards to the National Pensions Framework. 

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