Leo Varadkar’s pension plan for ‘second class sector’
A universal pension fund to help private sector workers is to be established to address the fact two-thirds of private sector workers have made no provision for their retirement.
In a major pitch to the so-called ‘squeezed middle’, Mr Varadkar is examining ways young couples can share greater amounts of parental leave to help address work-life balance issues.
Writing exclusively in Saturday’s Irish Examiner, Mr Varadkar — a leading contender to be the next Taoiseach — sets out his desire to introduce a universal top-up pension for workers on top of the basic State pension.
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Under his plan, Mr Varadkar is seeking to allow young couples “dip in” to their pension pots to fund what he calls “big life events” such as buying a house or funding a career break.
Mr Varadkar is looking to establish a ‘Personal Future Savings Account’ to tackle the country’s pension crisis.
It is envisaged, under the plan, employees would make a contribution, as does the employer, with the “State topping it up in the form of tax relief”.
“It’s your account so it can never be raided and you can take it with you to a new job, or even bring it abroad. You get an annual statement and can track its growth online,” says Mr Varadkar.
While some countries have said it could take 10 years to establish such a fund, Mr Varadkar says he wants it implemented by 2021.
“Our scoping exercise has convinced me that if we are ambitious we can start it in 2021,” he says.
“To make this possible we will now embark on a consultation process with employers and trade unions and I look forward to gathering a wide range of opinions in the months ahead.”
Mr Varadkar says that, in many ways, these employees are the labour market’s second-class citizens.
“They can be laid off, earn less on average, and tend to do less well in terms of paid family leave, annual leave and sick pay,” he says.
“That’s why I believe it’s time to amend our laws and afford private sector employees greater security and additional protections.”
Mr Varadkar has also given a strong indication as to what he intends bringing forward in October’s budget, by saying he will expand further the benefits people receive in return for paying PRSI.
“Paternity benefit was introduced last year,” he says.
“And, from October, treatment benefit will be restored to include free or subsidised eyeglasses and a scale and polish from your dentist.
“There is much more scope for expanding social insurance. That’s why I have proposed merging the USC into PRSI as part of a wider tax-cut and reform plan.”
On parental leave, he says: “My department and the Department of Justice are working on proposals to provide for more parental leave that can be shared by couples.”
At present, the Parental Leave Act allows men and women to take up to 14 weeks of unpaid leave from employment.
Meanwhile, speaking in Holland, Mr Kenny said his decision on the leadership will, in part, be determined by the EU’s negotiating position on Brexit.
“I’ve already made my position very clear that once I’m happy with having the ground rules for Brexit in place I’ll make my intentions very clear,” he said.
Mr Kenny refused to say if there will be a new Fine Gael leader at the end of the current Dáil term in July.
“I want to deal with this matter next Saturday and, hopefully, we get clarity about that... and then make my intentions very clear,” Mr Kenny said in reference to next week’s key EU summit.
