Willie O'Dea (Limerick City, Fianna Fail) | Oireachtas source

Dr. Bambrick mentioned the eminence of the total contributions system and I raised this the other day in the Dáil during Question Time. The Minister told me it is now envisaged this would not be introduced until at least the second half of next year. There is clearly consideration of the 40-year model versus the 30-year model. As the committee knows, the 40-year period applies to the temporary arrangement for the post-2012 people. We have strongly argued and made submissions to the Minister about why it should be 30 years for the proper system, which will go into place next year. I hope we will be successful in that regard. There is also another issue that has been brought to my attention and which will require a decision from the Government. In order to qualify at all for a contributory pension, a person will have to meet 520 contributions paid in total. That used to be 260 and this was unilaterally increased to 520 in 2012 but I do not know the reason behind that.

I take the point on auto-enrolment versus defined benefit pension schemes. The Government proposals on auto-enrolment indicate that where companies have a pension scheme in place, members will not be automatically enrolled and it will be a choice for members. There are a number of issues around that. I take the point about increases if benefits are lower or people losing out. We have made detailed submissions to the Government on that. It invited different political parties to make submissions and we have done so.

I take Mr. Hannigan's point, which has not been sufficiently emphasised in all this debate. It is the fundamental difference between defined benefit and defined contribution schemes. Anybody who has paid into a defined contribution scheme would have seen investment wiped out during the recession because investment managers do not have some sort of hidden wisdom and get things wrong. The auto-enrolment scheme is going to be a defined contribution scheme, which is the problem. I put it to the Minister and I did not get a response but if there is a 2% payment by the State, with 6% coming from both the employer and employee, is it possible that the State contribution could be used to provide an element of defined benefit? This could bring some certainty and people would not be hammered just because the guys who get the money to invest it make a hames of it, get it wrong or are unlucky. Is it possible part of that funding could be used to give more certainty about a minimum floor? I know the floor is already the contributory old-age pension but I would like to think there could be a second floor. The Chairman can confirm that we debated the Estimates for social welfare recently. The €5 per week we gave last year cost the Government approximately €80 million. The fact that so many extra people joined the ranks of the pensioners cost the Government three times that sum, and that trend will continue.