Mr. Robert Nicholson:

There are ways and means to achieve that. One could have a cash fund with an individual having a guarantee of funds coming out the other end. There would be capital requirements for providers to ensure that is delivered. For anything more than that, one would begin to move into a quasi defined benefit, DB, scenario, which begins to become more challenging. There could certainly be a fund. We will have to do an analysis of the client group and what the goals for them are but there could certainly be a cash-based fund. Whether that is best would have to be debated. It could be done.

The Senator referred to tension with tax relief. Tax relief is the responsibility of the Department of Finance and our colleagues in the Department, as part of the commitment made in the roadmap for reform, are currently reviewing the cost to the Exchequer of tax relief and looking at it in that space. We concentrated on trying to identify the needs of the particular population that we are talking about and suggesting that if the policy objective is as we set it, then it would appear that the kind of structure we are talking about would be better for that population. We have not taken a position on the wider system of tax relief. Having said that, it has been one of the lightning rods of conversation among the sectoral interests we have discussed. Some have expressed the view that the Senator has. Others have said that the marginal rate of tax relief in Ireland is particularly low and any suggestion of reducing that higher rate of tax relief will compromise what the Senator is talking about with regard to adequacy. Many moderate earners who are saving for their retirement will effectively have a wage drop if the current system of tax relief is reduced. That is an open question. For somebody on €40,000 to €45,000, if tax relief was moved from 40% to 33%, a three for one, or some other structure, they would suffer tax relief and may well behave in a way that we do not want to see as a result, such as backing out of pension savings.