Budget 2023 announcements will have more importance than usual to individuals and firms, particularly those under significant pressure from rising inflation. From a private pensions and benefits perspective however, Budget 2023 is perhaps notable more for what it doesn’t include, rather than for what it does. It also provides an important indication of reform measures that may lie ahead.
The Budget statement is dominated by measures aimed at tackling the rapidly-rising costs of living and business: the government will be providing an €11bn package, which includes over €4bn of one-off actions, to help the country cope with continuing global economic uncertainty and the highest rates of inflation seen in decades. The package delivers a mixture of tax cuts, social welfare spending and financial aid for business, as well as further support for energy bills, housing costs, and childcare in particular.
The government expects the inflationary environment to remain challenging in the short-term, with rates dropping back only slightly to 7% in 2023 from a projected 8.5% peak in 2022.
The lack of pensions and benefits measures in the Budget is not unexpected given the immediately pressing nature of severe cost of living increases.
However, the Minister for Social Protection has already commented publicly in recent days on the work that the government is progressing on a number of key policy initiatives relating to advancing reforms, introducing an auto-enrolment retirement savings scheme, and the implementation of a new master trust regime. Change in all of these respects may not be coming in 2023, but there are some signals that it may be coming in 2024.
The time-frame for these measures remains unknown. It is possible that the current economic uncertainty will present an obstacle to the government’s timetable.
Some other points to note:
For employers, the government has termed this year’s Budget as a “significant intervention…in the Irish economy to protect employment”.
Financial aid packages have been announced both for larger firms involved in exporting and manufacturing, and also for small to medium sized enterprises to help with energy bills.
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