The Small Firms Association has signalled its opposition to the idea of a mandatory pension scheme for Irish workers.

In its submission to the Universal Retirement Savings Group, which is examining the issue on behalf of the Department of Social Protection, the SFA says mandatory pension provision will prove costly to employees, to business and the state, without any associated benefits in the long term.

Patricia Callan, director of the Small Firms Association, says the fundamental reason the SFA is opposed to the idea is that not enough work has been done to promote the voluntary approach to pension provision. Ms Callan says the SFA is also very concerned about any increase in the cost of employment, particularly at this time when small businesses are just about getting back on their feet. She says that many SMEs are not even engaged in the concept of pay increases as yet. A mandatory pension scheme would be an extra cost for SMEs because in any such scheme there is always an employer's contribution as well as an employee's contribution - which by and large comes back on an employer in the form of a pay claim - and an Exchequer contribution, which is funded by both employees and employers. 

Ms Callan also says that a call for a mandatory pension scheme is an "over-reaction" as Ireland has a much younger population that the rest of the EU, which is following this mandatory trend and the economy has a lot of other measures which could be implemented to solve the pension crisis. She adds, however, that the Association does accept that a crisis does exist in the pension system.

The SFA director says that if there was more of a focus on getting people into work, on creating a better and more dynamic economy, then a pension crisis will not arise as the country will be able to fund a pension scheme better. "In particular, in terms of trying to persuade people that private pensions are the best way to go, we need better products, less charges and a much more guaranteed sense of return," Ms Callan says. The whole area is a very complex one which needs much more analysis, she adds.

MORNING BRIEFS - It is expected the Government will make a decision this week on whether or not to accept an offer to buy the state's stake in Aer Lingus. Transport Minister Paschal Donohue has received the report prepared for his department on the proposed takeover by International Consolidated Airlines Group, the owner of British Airways and Iberia. Officials at his department have also been sounding out their opposite numbers in the European Commission on issues such as possible competition concerns that might be raised by any deal.  Ryanair, the largest shareholder in Aer Lingus, reports results tomorrow. Any deal would need Ryanair's approval. Its public position on the IAG offer is that it will not make any decision until such time as a formal bid is on the table.

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