Ms Josephine Feehily:

Deputy Kerrane can remind me if I leave something out as I was furiously trying to keep track of the questions. I thank the Deputy for the comprehensive way she has reviewed our work. I will answer the questions in the order I got them.

As to why we picked 45 years for the very long insurance record, it follows from 40 years. The Irish social insurance system is somewhat unusual in that people pay full PRSI once they earn €38 a week, so people start paying PRSI very young for casual employment. It is one of the reasons why the averaging system is not very fair in terms of the pension, but that is another day’s work. It is not unusual when people reach the age of 65 for them to have worked for 45 years. Given that the recommendation for a full pension was 40 years, taking account of flexible access for people who had an exceptionally long record, it seemed to us that 45 was appropriate. It was as simple as that. As I said, quite a number of people start paying it at 16, so it is not exceptional.

I would like to talk a little about the Exchequer contribution. There were couple things driving our thoughts on that. First, the original policy grounding of the Social Insurance Fund in 1952 was tripartite funding. The tripartite funding has been observed but the Exchequer bit has been on a contingency basis and, for the first umpteen years of the fund, up until the middle of the 2000s, it was always in deficit. That was designed into it. It was meant to be tripartite funding. We took the view that capturing that general community solidarity contribution by a contribution coming from general taxation, which would not be discretionary, was an important return to that tripartite funding principle which was established from the outset and maintained for the first 40 to 45 years of the fund's existence. That was the first point, which was a solidarity point. How does everybody contribute? Everybody contributes through taxation.

Second, we felt that in order for the maths to be done appropriately every year, we needed certainty around the Exchequer bit and that it should not be down to squabbles. Third, the Exchequer makes a demand-led contribution which is legislated for in regard to private pensions in the form of tax relief. It is likely to make a demand-led contribution, which will be legislated for in the form of auto-enrolment for second-tier pensions, which will not be optional, so we felt that, for the first-tier pension, it should not be optional either. That is the thinking: the original policy driver plus the way the other two tiers of pensions are treated.

The Deputy asked whether we looked at poverty in respect of the adult dependants. We are aware of the Vincentian Partnership and the various definitions. It is quite clear from those definitions that a couple together has less risk of poverty than a person living alone. We looked at it from that point of view. We also looked at it from the point of view that if we take that at-risk-of-poverty measure, the likelihood is that the adult dependant will himself or herself be entitled to a non-contributory full pension,. That was as far as we looked at it.

In terms of the poverty risk, it is important to remember that if there is a couple at that point, the non-contributory pension is an important piece of the safety net.

We did not look at the retirement benefit of €203. I am afraid it was out of scope. We did not examine any issues to do with that.

On employment contracts, we clearly were aware that there were legal issues surrounding employment contracts. There is an overarching entitlement in the European directives as well. That is why we came up with a formula that would allow but not compel. It is a property right of the people who want to go at 65 years of age and they want their entitlements at 65. In many cases, it washes into their occupational pensions. That is how we understood the risk and that is how we came up with the formula to allow but not compel, and that future contracts should be aligned with the State pension age, whatever that may be from time to time.

On 40 years' contributions as opposed to 30 years' contributions, it goes back to the point I made about people starting really young. Thirty is very short. I would point out that the 40 years' contributions that we are recommending is for a full pension and a person with 30 years' contributions could very well get a partial pension. A person who emigrated could very well end up with a partial pension from another country where he or she worked. There are European Union rights but also there is a broader social security family with reciprocal agreements, etc. The emigration piece is probably well enough catered for by the range of agreements that would allow people to get perhaps two partial pensions. We did not look at the issue to do with martial status of widows. Did I answer all the questions?