Mr. David Begg:

The Senator is very welcome.

I will now turn to Deputy Byrne's questions. I do not want to frighten anybody but there are strategic issues for us as a country. We are lucky in regard to the demographics in that we are about two generations better off than most of Europe. That is a strong point we have. However, in the next ten to 15 years, we will be in the same position as Germany, Denmark and countries like that. It is a real and serious worry. The real challenge for us is to use the intervening time to properly plan for this and to address it. Let us face it that for the last 20 years, people have shied away from addressing this issue because of the enormity of the situation. We cannot do that any longer.

On the topic of encouraging people to take up pensions, young people do not generally think about it. I heard it said that pensions are very boring until a person reaches 50 years of age and then one becomes interested in them.

By the time one reaches the age of 60 years it becomes a riveting subject, but people lose out as a result of this. A few years ago we had the personal retirement savings account, PRSA, which fundamentally was intended to deal with the coverage question, but it did not. We must look at how we can deal with the issues of coverage and adequacy. The issue of adequacy arises because the amount of money being put into personal pension schemes is not adequate to give people the coverage they need to have a replacement income of approximately 50%. The general parameters of policy are to have a replacement income of 50%, approximately 34% of which is made up by the State pension, and coverage of approximately 70% of the working population. As we have not got near these figures in the past 20 years, there is a real problem.

Much of the thinking behind giving tax incentives is that it would follow that people would seek to have private coverage, but one of the difficulties is that the associated tax expenditures which are almost as large as the amount of money we pay out on the State pension scheme gravitate very much to those on higher incomes. If we take it that only 41% of those in the private sector are covered and two thirds of the benefit of the tax expenditures goes to the higher part of the upper 20% of the cohort of the population involved, we must ask from a policy perspective whether that is the best use. We must open it up for discussion. It is a formidable challenge because policy makers cannot operate in a way that suddenly collapses the fragile existing system we have in place.

The point made about women is absolutely correct. It is a real difficulty. If we look at the statistics, leaving aside occupational pensions, of those in receipt of the State pension, 64% of men receive a contributory pension, while only 27% of women qualify for the maximum rate of State pension alone and some 58% do not have this entitlement. I will use the situation in my house as an example. My wife had to leave the public service when she got married and could not continue her pension arrangements. When our children were young, she was out of the labour force for 17 years. She then went back in and tried to buy back an element of the public service pension. However, as it is a co-ordinated pension scheme, she will not have made enough contributions to qualify for the full State pension. Women are very vulnerable in that regard. The risk of poverty for older women is somewhat higher than that for men.