Joan Burton (Dublin West, Labour) | Oireachtas source

I agree with much of what Deputies O'Dea and Ó Snodaigh have said. On the precise item identified by Deputy O'Dea in his amendment, namely, the annual management charge, these are charges associated with the cost of fund management. It does not take account of other charges incurred such as contribution charges, policy fees, exit penalties and other undisclosed costs. The recommendation from the pension charges report I commissioned is to continue efforts to develop a single standard measure that would assess all costs and charges, thereby enabling easier comparisons to be made. In some way, the debate on charges in Ireland has been extraordinarily muted because, particularly in respect of the provision of pensions for self-employed people, accountants or tax consultants are standing beside people's side and on the one hand, there is a potential tax liability while on the other hand, there is a pension plan to which they possibly will contribute. In a way, people are focused on - of course the pension provider focuses on - the generosity of the tax reduction in such a way that in my experience, the charges get relegated to the small print. One is told that one could pay, for example, €50,000 in tax or, if one makes an appropriate investment in a pension fund, one's tax bill will fall by X amount. Consequently, one is considering charges in the psychological context of one's likely tax bill minus one's saving on entering into the pension. In that context, the management-type charges, commitment fees and so on, are relatively small compared with the tax relief. I believe this is one of the problems.

As I stated, when the new Pensions Council is under way, I will ask it specifically to consider this issue again. I have also asked the Central Bank to examine some charges that were identified in the report in respect of re-brokering. This is an area in which, particularly with small schemes, charges can be very high and it is important that this issue be dealt with. However, simply because of the dominance of tax reliefs in the Irish pension cost scheme, charges unfortunately have a much lower profile. In particular, for women and relatively low-paid workers accumulating, for example, a relatively modest personal retirement savings account, PRSA, of €100,000, the charges could have a very heavy impact on it and people really do not see this impact until the very end when they have exited. It is something that, as Minister, I keep under constant review.