GWU youths seek clarification of proposed pension system

The youth section of the General Workers' Union has welcomed the government's proposals and initiatives on pension reform but called on the authorities to ensure the interests of young people are safeguarded.

Addressing a news conference yesterday, section president Cory Greenland said it was important for youth organisations to discuss issues such as pensions and study the proposals being made by the government.

He said the GWU youths believed the pensions system should remain the government's responsibility and that the welfare state should continue to be supported.

In a report, sent to the Prime Minister and the Leader of the Opposition, the GWU youth section said the system should be one which enabled young people to plan for the long term.

It should be clear how the system could change in the future and the second pillar pension is still not defined, the report says. It would not be wise for young people to start contributing to a system which would then be changed in the middle or towards the end of their career.

Mr Greenland said young people should also be told what will happen after they have paid their 40 years of contributions if by that time they will still not have reached retirement age.

On the other hand, more attention should be given to those who would be unable to make 40 years of contributions. These could include women who have stopped working to bring up children.

The youth section believes that national insurance contributions should be set at 10 per cent of income, which percentage could increase gradually but not excessively in categories of higher income.

The section agreed with the proposals by the government's working group to remove the minimum contribution but noted that the government had not expressed its final preference on the matter.

Mr Greenland said the basic pension should be adequate but his section agreed with the possibility of supplementary and additional pensions should workers decide to invest in them.

The GWU youths noted that although the government's proposal for a pension to be calculated on the best 10 years in the last 20 years of employment was better than the working group's original proposal, the formula indicated could still lead to an inadequate pension. It felt the pension rate should continue to be calculated on the best three years.

The section said it did not agree that the retirement age should increase from 61 to 65. There were workers for whom this would be physically and mentally impossible.

Mr Greenland said that while the government was recognising the possibility that certain workers retired at 62 and received a reduced pension, this possibility should be widened to include all kinds of employment and it should also be possible for workers to retire at 61, rather than 62.

The GWU youths proposed a contingency plan worked out by the government and the operators of private pensions in order to act as a safeguard in the case of bankruptcy by one of the companies offering private pensions.