SME Chamber

A more tangible pensions reform to address real concerns necessary – GRTU

Increasing pension capping for business owners and self-employed amongst GRTU proposals for business-friendly pensions reform

GRTU urges Government to give the self-employed and business owners the recognition they deserve and introduce specific higher and more realistic 
pension capping rates for this group as part of the pension reform. Whilst GRTU welcomes the fact that the recommendations put forward by the Pensions Reform Group are not envisaged to shock the economy through increases in contributions, GRTU is concerned that the proposed reform does not necessarily provide a holistic solution that achieves tangible long-term results towards sustainability.

A fairer capping for self-employed and business-owners

GRTU believes that a more realistic approach specifically addressing the self-employed and business owners is required. Our self-employed and business owners have not only contributed heftily in financial terms over the years, but are also the main drivers of economic development and job creation. Their contribution must be acknowledged and translated into the pension they have contributed for and deserve. The current system is unjust especially when considering that other sectors of society, such as former Members of Parliament, are treated differently with no maximum capping on their pension. This measure should not only ensure a fairer pension to this sector of society but also disincentivise under-claiming of income, upon which an individual is to be taxed.

A system which is sensitive to self-employed’s realities

A thorough reform needs to take into consideration the context of self-employed which, in GRTU’s opinion, requires specific measures to reflect their reality. On these lines GRTU proposes allowing self-employed persons to retire early for cases where they are close to their retirement age and their business is no longer feasible.  Another measure would be of exempting self-employed persons from having to stop working for one year when the opt-outoption is taken. 

Worthwhile incentives are necessary to push forward diversification efforts

Incentives and measures being put forward need to be financially viable if take-up is to be registered once implementation is transposed from paper into practice. Some of the incentives proposed in the reform may seem welcoming on paper but do not make financial sense for end-users. Recommendation 13 suggests opting to renounce pensions for a minor permanent increase. In practice however it would take too long to recuperate the renounced pension itself.

An effective measure that GRTU believes would really incentivise pensioners to remain active in the labour market is the reduction or removal of taxation on pensions for working pensioners, or removal of NI contributions.

In itself however, the drive towards highering the working age, whether through incentives or imposed, also comes with its concerns. These may include sector-sensitivity matters based on issues such as the extent of physical activity or health hazards this may pose on ageing persons; as well as issues related to productivity and career opportunities.

Holistic reform

A stronger overall reform is necessary to sustain first pillar pensions whilst incentivising diversification.

GRTU believes that a long-term approach is needed to start addressing seriously the sustainability of the pensions system in the context of its social importance along with its economic viability.  The change must be gradual however change to the status quo is necessary. Postponing will only make matters worse and make change more difficult and costly.


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