The Opposition will support a Bill making provisions for voluntary private pensions but it believes the legislation does not go far enough.
Opposition finance spokesman Tonio Fenech yesterday said the incentives offered to encourage people to take out a private pension were not generous enough.
The proposal is for a tax rebate of 15 per cent on money invested in a pension fund up to a maximum of €1,000.
Mr Fenech said the maximum capping and the rebate were too low, reflecting similar criticism made by financial services operators earlier this year.
The parliamentary debate started yesterday and Mr Fenech said the Opposition would vote for the Bill. However, he said this development on its own was not enough to ensure future pensioners would enjoy a decent quality of life.
Not everyone could afford to take out a private pension scheme and the 2005 pension reform envisaged private pensions – known as the third pillar – as a voluntary top-up.
Not enough to ensure future pensioners would enjoy decent quality of life
The reform had proposed the introduction of an obligatory second pillar pension, which would be part-financed by employers and employees, to bolster income from the State pension.
However, the second pillar was postponed since employers argued it would burden them with extra costs they could not afford.
Mr Fenech urged the government to initiate a debate on the second pillar pension and cautioned against complacency. “It is wrong to believe that the third pillar would be enough to bridge the gap in income pensioners would receive.
“The Opposition will collaborate with the government to introduce the second pillar gradually and the least we could have right now is a debate on how to achieve this.”
The 2005 reform, that had raised the retirement age to 65 for men and women and increased the maximum ceiling for State pensions, will see pensioner income increase from 18 per cent to 45 per cent of the average national wage by 2060.
The target to ensure pensioners do not fall into the risk of poverty is to have income equivalent to 60 per cent of the average national wage.
The gap between the first stage of the reform and the eventual target had to be bridged through the introduction of second pillar pensions.