Joan Burton (Dublin West, Labour) | Oireachtas source

First I will answer the Deputy's query about the changes in required contributions. I wish to draw attention again to the fact that the KPMG actuarial review in 2012 stated that the pensioner support ratio in Ireland is projected to decline from 5.3 workers for every individual person of pension age in 2010 to 3.9 workers by 2020 and 2.1 workers by 2060. In other words, the number of people at work is in decline relative to the number of people on pensions.

With regard to the number of contributions required, the legislation regarding the 520 contributions was passed in 1997. It had a very long lead time: part of it was implemented in the early 2000s and the next part of it fell to be legislated for in 2012, to come into effect in 2013. One must plan for pensions because it is so important to have an adequate income for people in retirement. It is a fact that, as we move forward, we require people to have 520 contributions and to have contributions over a ten-year period. In a lot of cases in Ireland we required a much lesser period, plus we gave credits to people who were out of the labour force because of particular home duties. As the number of workers is declining relative to the number of pensioners, if we want people to have the kinds of pensions that they and we aspire to then we need to ensure that we have a sufficiency of contribution.

I commissioned the OECD to carry out a review of the Irish pension system. It found that Ireland provides a very strong level of State pension, which is a good thing about Ireland. All political parties have been in agreement and have strongly supported the situation. The OECD suggested that Ireland should have a supplementary pension contributory system on either a mandatory enrolment or an auto-enrolment basis. As I have told Deputies before, the Department has carried out very detailed work and is discussing it with colleagues in the Department of Finance, because this matter is really important for people's futures and for when they retire. I am in discussion within Government on how best to progress the idea over a period, particularly as the economy improves. Obviously a supplementary pension is a way for people to save more money for their pensions. Some 50% of people in work have no pension cover other than State pension cover. If some people do not have enough contributions they will find themselves receiving a very low rate of payment on retirement.

As we speak we are changing the governance of the pensions regulator. One of the things that I want the new pensions council to focus on is pension charges, as Deputy Ó Snodaigh mentioned. I commissioned a report on pension charges in Ireland. It was the first time the matter was formally examined by the Department of Social Protection and the report indicated that questions must be answered. We need to ensure that people who save for their pensions, perhaps through deductions from their wages by themselves and by their employers, get the best value. It is something we will return to, because we want more people saving for pensions. We do not want the pensions industry ripping people off with bad-value deals. For example, silent costs can be relatively high, which leads to people discovering, on retirement, that they have paid significant sums in various fees and charges and ending up with a lower pension than they thought they were contributing to.