Mr. Justin Moran:

Mr. Scully can answer the last question on the non-contribution pension after I respond.

In terms of the other points, moving to a system involving total contributions with credits is where we will end up. The system outlined by the Chairman would be fairer. We would worry how long it will take us to get there. We have heard a lot about it being introduced by 2020 but we think that is optimistic. The discussion would be greatly helped if the Government gave us more information on the design, format or structure of the scheme. If the Government was serious about changing something as substantial as the State's pension system by 2020, it would need to be talking about it in some detail now.

I will outline one of the challenges that we experienced as a result of the 2012 pensions cut. Many people came to us about it, and still do, because they did not know that a change had occurred. The Government or Department might be spurred on to adopt a total contributions approach if they took Senator Higgins's suggestion on board to suspend the 2012 changes. The move would be welcomed by many people. Our members have taken the initiative to write personally to the Department or to their Deputies and public representatives. They have received letters to the effect that the respondent appreciates they are in a certain situation and there is an anomaly but the Government is moving to a total contributions approach in 2020. Being told that the Government will tackle the matter in 2020 is unhelpful when one can lose €1,000 per year, as a result of the 2012 changes, as some women and men have done. The amount involved is a fairly substantial sum, particularly for someone in receipt of the State pension.

Senator Higgins suggested that it would be better to increase PRSI payments now and I agree with her that we need to do so. Our opening statement contains a reference to the research conducted into this area. Mr. Paul Sweeney highlighted the fact that Ireland has one of the lowest employers' PRSI contribution rates in Europe, which is 7 points lower than the OECD average and lower than the average of the EU's 15 countries. Employers and job creation would be impacted by increased social insurance contributions. We need to commence a conversation. If we want a sustainable State pension system, people must put money into the Social Insurance Fund. Many employees and workers already pay a substantial amount of taxes, not just PRSI but through other income contributions. In a situation where workers are asked to work longer due an increased retirement age and we prevent them from working beyond the mandatory retirement age of 65, it is time to consider the type of contributions employers make, especially in the context of the sacrifices that workers have made over the past number of years.

In response to whether the current tax reliefs are defensible, I raised the issue because when we talk about the State pension a figure of €7 billion is bandied about. We spend €7 billion a year and it will increase by €200 million a year. We actually spend more on pensions but in the form of occupational and personal pensions. If we are going to have a discussion, then let us have it in the round. Let us add the two figures together, which is €10 billion more or less, and decide how to spend it. Perhaps the best and fairest way to spend it is to have a State pension system and to adopt a total contributions approach and provide supports for private pensions. At the moment the supports are not geared in the right way, especially when one considers the disparity between where the benefits for the private pension tax reliefs occur.

To be clear, saving for retirement and having a private pension is a sensible thing to do. It is an appropriate and sensible use of Government funding to incentivise people to save for their retirement. I wonder if we are putting money into the State pension that could be better used elsewhere.

The Chairman made a point about getting the necessary data. We found it a little challenging to get a gender breakdown of data for our report on the 2012 figures. Such data is not published in the annual statistics report released by the Department of Social Protection. Bad data leads to bad decisions but good data leads to good decisions. The more information is publically available to elected representatives and organisations like ourselves the better, and everyone can make an informed decision.

Mr. Scully will answer the question on the non-contributory pension.