The Irish government's recently unveiled New National Pensions Framework has come in for criticism from various business bodies, including the Small Firms Association.

Under the proposed package, employees and employers face having to make mandatory contributions to a pension scheme, and workers face having to work until 68 before they qualify for the state pension.

Patricia Callan, SFA Director, has argued that the mandatory pension provision element of the framework in particular is "premature" and misguided, and is likely to have a significant detrimental effect on businesses, without providing a great deal of additional benefit.

“Moving to mandatory pension provision at this time makes no sense, as we still have a comparatively young population in comparison to the rest of the EU, and have by no means exhausted the many opportunities still available to us to increase the success of voluntary schemes," she observed, continuing:

“The cost of mandatory pension provision to the economy as a whole is clearly prohibitive. With small employers struggling to keep their doors open, and trying to reduce costs, it is unacceptable to impose an extra direct tax on labour for employers of 2%, and a potential additional 4% increase in the cost of labour, as employees traditionally demand to be compensated by their employers for any apparent reduction in their real take-home pay."

"With many employees already having less disposable income, due to reduction in working hours, basic pay rates and other remuneration benefits, the willingness of people to accept compulsory pension savings is seriously questionable. The Exchequer contribution also has to be funded by the tax-base, which is made up of business and employees, so they will effectively be hit twice. This proposal is simply unworkable."

Introducing the package, Social Affairs Minister, Mary Hanfin reportedly justified the proposed changes to the Republic's pension system partially in terms of increased life expenctancy, coupled with a failure by Irish citizens to make adequate provision for their retirement.

“It has increasingly become evident that many Irish workers are not saving enough for their retirement and will be faced with a serious drop in income when they retire," she was quoted by the Irish Times as explaining.

The Irish Business and Employers Confederation (IBEC) meanwhile, presented a more mixed reaction to the Framework, welcoming the phased increase of the retirement age from 65 to 66 in 2014, to 67 in 2021 and to 68 in 2028.

However, IBEC Director, Brendan McGinty went on to argue that:

"Mandatory employer pension provision will fuel wage demands, particularly in labour intensive industries and small employers. These are businesses already struggling to survive."