Pearse Doherty (Donegal, Sinn Fein)

The Minister has increased the standard fund threshold to €2.8 million. I have raised concerns in relation to this in the past because obviously that is a huge windfall for people who are able to amass a pension pot of that nature. Again, the vast majority of people in the State are not going to get a whiff of a €2.8 million pension pot. What he has done in relation to the standard fund threshold will mean that the State will support individuals building up a pension pot to €2.8 million, but after that the support stops. I really question whether it is appropriate for the State to contribute to somebody's pension pot when it has reached that level.

My answer in that regard is "No". That is my view. There is obviously a requirement for ongoing support, for the State to support the pensions of individuals, and, therefore, tax relief is appropriate. However, there must be a question as to the point at which you stop giving that support. The Minister has taken the position that people can avail of pension pots up to €2.8 million. That is what my amendment considers. It looks at a report on the issue of the standard fund threshold, clearly outlining how much it is going to cost, because let us call a spade a spade: the numbers coming from the Minister and the Department are wishful thinking. If they think that this measure is going to cost €10 million, it is laughable. There is going to be behavioural change as a result of this measure.

What we are talking about in Deputy Brennan's amendment is separate. These are individuals who have no option but that the contribution is made. We are now going to have people who put money into their pensions. These would be higher wealth individuals, obviously. They are going to put money into their pensions and when their pension reaches €2.2 million, they will stop doing so because they will be hit by the chargeable excess tax. That is going to change now. Therefore, there is going to be a larger cost to the State as a result of the measures that were introduced. We sometimes have fake rows about what things cost or getting costings wrong, but there is no way that this measure will cost only €10 million.

We talked earlier about SARP and how it benefited to the tune of €105,000 some of the highest paid individuals. That measure in terms of the standard fund threshold will benefit people to the tune of €325,000 of a tax reduction. That is mental stuff. At that level, the supports should not be given. Those are my points on the amendment.

I will move to the issue of Deputy Brennan's proposal, which, as he indicated, is the proposal that exists in the de Buitléir report. He looked at how to deal with recruitment and retention for the higher levels of the public sector in particular. It was mentioned earlier that the Garda, in particular, was in focus in that regard. One of the ways to do that is to deal with age-related factors. There are a number of ways to do this. We need to deal with it. These are individuals who are not personally contributing. There is obviously a deduction that is going into a pension pot. However, these are notional payments, as such. When you have a defined benefit pension, the value of your pension pot is calculated using an age-related factor, which did not exist 15 years ago. The factors that exist today did not exist 15 years ago. It was a smaller factor and was not age-related. The age-related factor makes sense because the earlier you retire, the longer you will benefit from the pension. Therefore, the notional value of your pension pot is increased.

The Garda has fast-accumulating pensions and gardaí must retire at a certain age. They have to retire at the age of 63. I am not sure if that is the correct age, but they have to retire at a certain time. They are in a situation whereby the age-related factor hits them harder because they are not able to work on. Deputy Nash talked about the Judiciary. Members of the Judiciary are entitled to work on and, therefore, the age-related factor does not impact them or make it as difficult.

My view is that we should not be increasing the standard fund threshold. I know the Minister will say that increasing the standard fund threshold will assist a number of these individuals. That is correct. I do not think what the Minister has done will address the issue in totality. We are talking here about individuals at the higher end with large defined pensions. We are talking about at least 80,000 people hitting the standard fund threshold as it exists, never mind where it is going. We are talking about people in very senior roles. We are talking about a small cohort. To move the standard fund threshold to deal with them is madness. If I were an adviser to anybody with wealth, I would say that the first thing to do is to put money into a pension. That is what advisers tell people to do. The State is going to pay 40% of what you put in. If your pension pot is worth €2 million, the Minister has now allowed you to put it up to €2.8 million, with a tax reduction of €325,000. That is what people with wealth would do and that is what will happen. It will cost the State a lot of money. It is not the way to resolve the issue in relation to very senior people who, as a result of the way the defined benefit pension is calculated, have pensions that will hit the standard fund threshold amount.

There are two other ways to do it. One is to exempt a category of employees from the standard fund threshold. That could be considered. The second way, as Deputy Brennan has suggested, is to deal with the age-related factor, which is what the de Buitléir report suggested. There is absolutely no doubt that we have to deal with this.

This measure applies to all defined benefit pensions. When these measures were introduced, there were a lot of defined benefit pensions in the private sector. There are not many any more. Defined benefit pensions are primarily in the public sector. This a broader issue and most of the defined benefit pensions in the public sector will not hit the standard fund threshold. Within our own ranks, you would have to be a Minister for a number of years to reach the standard fund threshold. We are talking about very senior civil servants. Most people in the health and education systems will not hit the threshold at this point.

This proposal could work if it captures the individuals we are talking about. Is there a group of defined pensions within the private sector that would benefit? Is there an ability for defined pensions to re-emerge in the private sector because of the treatment they would receive as a result of the relevant age-related factor? As we know, there are valid reasons, particularly after the crash, that so many people moved away from defined benefit to defined contribution.

I have said a lot on this but I wanted to make my points about the standard fund threshold. The issue in Deputy Brennan's amendment affects a small cohort of individuals. There is an absolute need to deal with it. Because we are talking about a small number of individuals, surely to God we can find a way of dealing with the issue.