Joan Burton (Dublin West, Labour) | Oireachtas source

I indicated my own preference. The people who do not have any type of proper pension structure are typically people in low paid jobs, women and other people who have interrupted periods of employment for different reasons. Most of them end up relying solely and exclusively on the State pension because their employment does not provide for a pension. If we were to develop a national scheme of supplementary pension to which individual employees would contribute over their working lives, the State, possibly through taxation or other mechanisms, and the employer would achieve the goal in which most people are interested, in that people, particularly those who are less well off, would end up with some pension provision in excess of the State contributory retirement pension. In comparison with other EU countries, payments in Ireland are at the higher end of the scale. The current level of the State retirement pension at €12,000 per annum is not a huge amount on which to retire. I understand the Deputy has a different conclusion. Having considered the matter, this would not be achieved through the introduction of an employer obligation. I think the way to go is to develop the supplementary mandatory or auto-enrolment system. Other countries have done this and in doing so have achieved vastly improved cover. The reality in relation to defined pension schemes is that they have been in trouble for two decades now, in particular since the late 1980s when the accounting standards in relation to how pensions would be treated in accounts were changed dramatically. This led to the changes that have been experienced.

In regard to the taxpayer liability, which is important, this applies in respect of a double insolvency, namely, where a company and pension become insolvent. I would sincerely hope and expect that because in the past this has been a relatively rare event there will be no double insolvencies in the future. The capping of benefits was discussed in the context of an earlier amendment.

In terms of pension law the advice of the Attorney General is that what was introduced had to avoid discrimination against any particular group, and had to be fair and proportionate. It was a difficult call. In the context of our discussion of the Mercer report and the discussions with the various stakeholders, including retired people and those involved in the pensions industry, many expressed a preference that the level of pensioner protection would stop at €6,000. As we discussed earlier, I opted for €12,000 floor of protection because the median pension for most people in DB schemes is €11,000. We then have a sliding scale for people with pensions between €12,000 and €60,000, and then people with pensions of above €60,000, which, as the Deputy said, is a significant pension. The legal advice was that what we did had to be fair and proportionate, and could not discriminate against any group. As with the Financial Emergency Measures in the Public Interest Acts, the argument would be that the higher-paid groups would have contributed more in pension contributions than people getting a lower level of pension entitlement. Except in relatively rare cases, that tends to be the truth of the matter. That was the legal advice which I needed to take into account in drawing up the legislation.