Joanna Tuffy (Dublin Mid West, Labour)
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The first item today is the report on pension charges in Ireland. I welcome officials from the Department of Social Protection: Ms Patricia Murphy, principal officer, pensions and carers policy unit, and Mr. Robert Nicholson, assistant principal. I also welcome Mr. Andrew Nugent from the Pensions Board, Mr. Joe Morley from the Central Bank and Mr. Niall McGrath from PricewaterhouseCoopers.

I wish to draw the attention of witnesses to the following. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or persons or an entity by name or in such a way as to make him, her or it identifiable. I advise the witnesses that their opening statements will be published on the committee's website after the meeting.

Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I now invite Ms Murphy to make her opening remarks.

Ms Patricia Murphy:

I thank the committee for its invitation to present the findings of the report on pension charges. The committee will have received copies of my speaking note. Copies of the report have also been provided to the committee.

My name is Patricia Murphy and I am the principal officer in the pensions policy section of the Department of Social Protection. I am accompanied by Mr. Robert Nicholson, assistant principal, pensions policy, Mr. Andrew Nugent, assistant head of policy at the Pensions Board, Mr. Joe Morley from the Central Bank and Mr. Niall McGrath from PricewaterhouseCoopers, who provided support in the report's preparation.

The report was requested by the Minister for Social Protection to gather information on the levels of pension charge levied on private and occupational pension arrangements for the purpose of assessing whether charges are reasonable and transparent, and to report on the findings and make recommendations, as appropriate, to the Minister and the Government. This is the first comprehensive Government report on the subject. The work was led by the Department of Social Protection with a steering group that included representatives from the Pensions Board and the Central Bank. Assistance throughout was provided by PricewaterhouseCoopers.

A primary objective of the research was to undertake a fact-finding exercise on the charging structures that apply across the various pension arrangements and provide an insight into the breakdown of charges and costs relating to pension provision in Ireland, with the goal of enhancing the understanding of the impact of such charges on the investments of pension scheme members and policy holders. The scope of the research focused on costs arising during the pension saving cycle from initial set-up to the point of retirement.

In undertaking the research, pension arrangements were divided into two main categories: employer-sponsored pension arrangements, which included defined benefit schemes, defined contribution insured schemes, defined contribution non-insured schemes, and public sector AVC schemes; and individual pension arrangements, such as retirement annuity contracts, executive or one-man pension plans, standard personal retirement savings accounts, and buy-out bonds.
Pension charges can be broadly categorised as disclosed or non-disclosed, which also is implicit. Disclosed charges vary in nature and include items such as an annual management charge, allocation rate, policy fee, bid-offer spread, exit fee and cost of commission distribution. Non-disclosed implicit charges relate to underlying costs of investment management, such as custodianship fees. These types of additional cost will have an impact on long-term pension values to differing degrees and are not typically disclosed to individual pension savers.

During the research, questionnaires were issued to the following: occupational pension scheme trustees, for those pension arrangements where trustees are in place, with 340 out of 1,015 responding; life assurance companies, for those pension arrangements in which life assurance companies were the predominant provider, with 12 out of 14 providers responding; investment management, with 8 out of 9 responding; and pension advisers, who often provide the link between trustees, employers and individuals and pension providers, with 37 out of 60 responding.

With regard to conclusions, the report highlights a wide range of issues with regard to pension charges and identifies a number of serious problems. It is recognised that the provision of pension schemes cannot be cost-free. It is also clear that there are major challenges to be addressed in the two main areas of reasonableness and transparency.

On reasonableness, the report concludes that there is a considerable variation in the range of charges imposed. Some schemes and individuals appear to be paying more than they need to. Smaller occupational pension schemes and individual pension arrangements appear to be comparatively expensive. A member of a defined contribution scheme with a final pension fund of €400,000 could lose up to 15%, or €60,000, in charges. An individual with a final pension fund of €400,000 could lose up to 30%, or €120,000, in charges. The research indicated that, as a rule of thumb, every 0.25% increase in the reduction in yield, which is the annual cost of all charges applied to the fund, results in a decrease of 4% in the final projected value of the pension fund.

With regard to transparency, the report concludes that there are deficiencies and inconsistencies in current practices and a culture of providing clear information in a simple manner is not evident. It also concluded that improvements in disclosure requirements, including those for pensions, were introduced in the Central Bank's 2012 consumer protection code and these should enhance transparency for those consumers covered by the code. There are also various ongoing developments at EU level which should lead to stronger consumer protection over time. The report may also be of interest to other agencies that have a role in market regulation and consumer protection.

Developments on broader pensions policy could also have a significant impact given that the research clearly identifies the importance of economies of scale in driving down charges. For example, the proposed introduction of an auto-enrolment pension scheme for all employees may be the most effective way to introduce change and could have a major impact in reducing charges, particularly for those people with small pension funds and reduced pension expectations.

The research also observed that the number of occupational pension schemes with legacy pension charging structures is small. A key finding is that scheme review and amendment, known as re-brokering, is significant in the case of occupational pension schemes and is also relatively common in individual pension arrangements.

The practice of applying commission is prevalent in defined contribution insured schemes but is particularly widespread within individual pension arrangements. There is no standardised approach to providing information on the impact of commission payments and the research shows that the various approaches used will affect members differently depending upon circumstances - for example, their age and period to retirement.

The recommendations in the report are principally focused on what can be achieved relatively quickly by improving regulation and best practice in disclosure. A summary of the recommendations is set out on pages 19 and 20 of the report and include the following proposals: develop approaches to improve consumer, employer and trustee awareness and knowledge of pension charges, which should ensure that information is clear and concise, with charges standardised where possible and based on best practice; develop a communications action plan on pension charges; review occupational pension disclosure regulations specifically to provide for the issuing of an annual statement to all deferred members, improve the information provided in the statement of reasonable projection, and review the need for focused detail; monitor developments and continue efforts to develop a single standard measure that would assess all costs and charges and thereby enable easier comparisons to be made; continue to monitor the implementation of the 2012 consumer protection code; conduct further research on the drivers behind consumer choice of individual pension products, with particular reference to PRSAs; ensure data on charges is collected on a periodic basis, with three-yearly intervals considered appropriate; and evaluate the impact of this report, these recommendations and future EU developments after two years and assess whether further and more stringent recommendations are required.

Individuals and bodies have been given an opportunity to consider the report and its recommendations and respond at the end of January. I thank the Chairman and the committee for inviting the Department here today. My colleagues and I would be happy to answer any questions you may have.

Willie O'Dea (Limerick City, Fianna Fail)
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I thank Ms Murphy for her presentation and I commend the people who compiled the report. Obviously it is a large and comprehensive report, but it is a worrying one in some respects. I want to look at the context against which the report has been presented.

We are dealing with a situation where pension schemes have suffered horrendous losses, regardless of whether they are defined contribution or defined benefit schemes. In many cases, they have been very badly managed. Practically every defined benefit scheme in the country is underwater, yet the committee stated: "A member of a defined contribution scheme with a final pension fund of €400,000 could lose up to 15% or €60,000 on charges. [That is not the best of it.] An individual with a final pension fund of €400,000 could lose up to 30% or €120,000". According to the speaking note, there are two types of charge, the ones that are up front and those which are hidden. In the context of a business that has already been fleeced by charges and is also underwater financially, why should there be hidden charges? Surely, one would expect all charges to be out in the open at this time, especially given the context in which we are speaking.

The committee that put the report together appears to have been concentrating on achieving transparency in the hope that if people knew what was happening, what other people were charging and so forth, it would encourage competition and thereby drive down prices. I will make two comments in that regard. First, I realise this is just a report of the recommendations, but much of the content of the recommendations is about monitoring, developing approaches and schemes, reviewing, conducting further research and so forth. There is a glaring lack of urgency, even though we are dealing with an urgent and critical issue. Second, are we not considering the possibility of not only bringing all these charges into the open but also of imposing some limits on the amount people can charge for managing pension funds? We should be examining that aspect.

There are a few other matters that worry me, for example, the reference to the great solution or the white knight to come to the rescue, that is, the auto-enrolment scheme. Frankly, we are light years away from an auto-enrolment scheme. Look at the current situation and the reports from organisations such as the Irish League of Credit Unions which show that people have approximately €50 in disposable cash left each month after paying their bills. One could enrol any number of people onto the auto-enrolment scheme, but they would all opt out again simply because they would not be able to live. In view of the broad economic position, anything that takes more money out of the economy at this stage will be a non-runner.

Obviously, there is a great deal of work to be done in this regard. However, my focus would be on getting everything out in the open in simple and easy to understand terminology and, second, imposing some limits on the amount people can charge for their services. Some of these services have not performed too well, judging by the results.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I welcome the report. It is an issue that has annoyed many people who, when considering their pension, have an idea about how much they will hopefully receive when they avail of it and are suddenly confronted with charges, hidden charges and whatnot. There is a great deal of work ahead of us in that regard.

There is a series of recommendations. There is also the issue of changes that have been introduced in the Central Bank legislation and possibly other legislative changes. Can some of the recommendations and changes be imposed retrospectively or do they only apply to all new pensions? The difficulty for us, as legislators, is that we are told we cannot apply something once somebody has signed a contract, even when that contract contains hidden charges. Some of the changes mentioned are quite simple and I hope the industry will agree to and adopt them on a voluntary basis. If not, can it be forced to disclose in full the fees and charges that have remained hidden from its customers? This is particularly relevant nowadays when people are trying to decide whether they should continue to contribute to a pension fund. Many people are in dire straits and if they see that the final figure is much lower than they anticipated, they might pull out. Some of them are putting themselves under a great deal of financial strain just to continue making payments in the hope of receiving a pension at the end of it. It is similar to the health insurance issue. People continue to make the payments because they have paid in for so long.

The glossary associated with the report is longer than the recommendations, which is an example of how complicated it is. It is not an area in which I have expertise. I will definitely go through the report to tease out a few more questions as the changes and recommendations are progressed. There is a degree of urgency about this, but we must also ensure we get it right, especially if the Minister, as she has said, is moving towards auto enrolment. Again, that is a separate pension scheme and it will have its own fees and charges, but, because the State will be involved, they will be up-front and above board. Perhaps that will also force the industry to try to compete with that new model. It is not one with which I fully agree, but if it is going to be put in place, it will have to be a model that will make the private industry reach its target. There is a job of work to be done in that regard. The report is well done.

Ms Patricia Murphy:

I thank the Deputies for their comments on the report, the scope and purpose of which are really fact finding. We acknowledge the issue is very complex and the length and detail of the report reflect the topic dealt with.

A number of points were made by the Deputies. With regard to implicit charges, it is acknowledged in the report in respect of the non-disclosed element of the charges that it would be helpful if in the future some consistent way of providing for these charges could be determined. On the recommendations, their focus was on what actions could be taken reasonably quickly to promote transparency. The lack of transparency was seen as one of the major difficulties. The recommendations focused on identifying gaps in the existing disclosure regulations to provide more information for scheme members and on looking at how the consumer protection code, introduced last year by the Central Bank, was operating with regard to providing more complete and full information for consumers in order that they could see what charges they were paying.

The issue of price regulation is discussed in the report. The view of the steering group was that initiatives to promote transparency might be more successful at promoting competition initially, but if that was not seen to work, perhaps more stringent action might be taken. PRSAs have their price fixed by regulation, but that price effectively operates as a maximum. One of the recommendations made in the report is that we look at how they are operating for consumers who might need them. Also, the consultation is just coming to an end and we will be looking at the submissions that arrive and reverting back to the Minister and the Government for their views about the implementation of the recommendations made.

Fidelma Healy Eames (Fine Gael)
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I welcome the panel. This is a fine report. The level of charges is madness and I concur with the comments of Deputy O'Dea. Why is there such a difference? Both levels of charges are huge. Why is there such a difference between 30% on individual pension schemes and 15% on occupational pension schemes? Is it because occupational pension schemes are doing more of the work?

What can we do to reduce these costs? The panel has made a number of recommendations on transparency. How can an individual find out if he or she is paying too much? With regard to the report's recommendations, who must carry these out? Is it the underwriter of the pension scheme, such as Irish Life or Standard Life? In what way do these companies liaise with the Minister for Social Protection?

The panel surveyed quite a few groups to produce this report. Did the possibility arise of taking out money from pensions funds to help individuals meet current commitments? Did it come up as an add-on comment? The panel may not have been looking for a view on it but may have heard it raised.

Ms Murphy referred to not collecting set information on commission structures, yet there is a clear question on page 263: "What factors typically influence the type of commission structures you typically choose for such pension arrangements?" The panel asked a very clear question on PRSAs, personal retirement bonds, executive pensions, approved retirement funds and groups. What were the findings and what is the level of commission? It used to be very high, 60% on a personal pension fund. I am keen to get answers to help people who have decided, in the case of individual schemes, to invest in these pension funds. Anyone with an occupational pension scheme has no choice but to invest.

Brendan Ryan (Dublin North, Labour)
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On a point related to the matters raised by Deputy O'Dea and Senator Healy Eames, is the industry in Ireland making super-normal profits? How does the industry in Ireland compare with international standards? It does not appear to be covered in the report. Perhaps the witnesses can address this point if they have covered it in the report.

With regard to the potential levy on funds, as public policy a 0.6% levy was applied to the pensions industry by the Government to fund jobs initiatives. What flexibility do pension schemes have in respect of how they apply the levy? I refer to the pension scheme of the airline based in the middle of my constituency. People have received letters to say that the funds have not applied the 0.6% levy over the past two years but it is their intention to apply a 1.2% levy on those funds permanently. In terms of the flexibility of schemes to do such things, it seems to be against the thrust of the intention of the levy. I am interested in the comments of the panel in that regard.

Joanna Tuffy (Dublin Mid West, Labour)
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On that point, it has been said to me that some companies seem to charge the pension fund levy to customers. I am not sure if this is when the person received the pension payment or when the person receives notice of charges but it was noted on a slip received by the person. Has the panel examined the allocation of the pension levy and whether this is being done fairly? Has the panel come across cases where the levy seems to be charged to individual customers? The person who mentioned it to me anecdotally suggested it was being described as a Government levy the customer was paying.

Ms Patricia Murphy:

I will respond to the questions in order. With regard to the difference in price between the occupational schemes and individual arrangements, the cost is split in occupational schemes between employers and individual members. What comes through from the findings is that individual arrangements are more expensive. Some of that can relate to scale because one of the key findings of the report is that the bigger the employer, the lower the cost. For an individual, costs will be higher.

With regard to transparency, and the question of how an individual can find out if he or she is paying too much, it is quite difficult. Asking questions of the adviser is critical. The report wanted to set out the facts in this area and to present information. We used a reduction in yield to quantify costs. Someone dealing with the scheme can ask about the reduction in yield in respect of the arrangement the person is in and can then make a comparison in terms of how they fare on the variability of charges that apply.

Fidelma Healy Eames (Fine Gael)
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Is there a responsibility on the pension company to let the individual know the charges? If the customer finds out he or she is paying too much, he or she can claim it back. We have a situation with credit card schemes where insurance was taken out for a number of years unknown to the customers. What is the responsibility of the pension company?

Mr. Joe Morley:

The consumer protection code, which the Central Bank introduced in 2012, has a requirement on insurance companies to provide an annual statement to the individuals indicating the opening balance, the moneys paid, the number of units held and all charges and deductions affecting the investment product. That is in place from 2012 and also covers existing products, not just products sold since 2012.

Fidelma Healy Eames (Fine Gael)
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Does it benchmark fees against what the charges should have been? How will the customer know that he or she was being charged too much?

Mr. Joe Morley:

The statement provides information. The consumer should interact with the adviser who sold the product to provide ongoing advice. The adviser will be able to help out on that point. The statement will provide the charges. Initially, the person should have been given a list of charges in the policy although there is a gamut of charges. This goes some of the way to assist people to compare charges with what they were sold originally. This point is in the new consumer protection code.

Ms Patricia Murphy:

The possibility of taking sums of money from the fund was not within the scope of the report. I do not have been any information on it.

With regard to the regulatory structure and who asks questions about occupational schemes, this is the responsibility of trustees who manage the schemes. They work with the employers and they must ask the questions of the providers or advisers. In the case of the individual, the individual takes on the burden and queries the intermediary or adviser he or she is dealing with.

The schemes are regulated by the Pensions Board and providers are regulated by the Central Bank.

In response to the question on commission, we looked extensively at rates of commission throughout the report. We looked at how often this arises and found it was less prevalent in occupational schemes. In defined contribution schemes that are managed by the life assurance sector, commission is prevalent in 39% of policies and costs can vary, with initial commission ranging from 1% to 20% for up-front commission, and renewal commission ranging from 1% to 5%, averaging out at 2.8%. Commission on funds averages out at 0.5%. Commission is much more prevalent in individual arrangements and the up-front commission in this instance was 25% generally, with commission of 1% to 5% on renewal or recurring policies and a trade up-front commission of 0.5% on larger arrangements. Commission is a higher cost in the individual arrangements.

Fidelma Healy Eames (Fine Gael)
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Chairman, may I ask a linked question?

Joanna Tuffy (Dublin Mid West, Labour)
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I will come to the Senator when we come back to further questions. Senator Healy Eames asked how the group will liaise with the Minister in terms of ensuring the recommendations are implemented.

Ms Patricia Murphy:

At the end of the consultation we will be reverting to the Government on the conclusions and recommendations. On the basis of the content of the report, the Department will work with the Pensions Board and the Central Bank to implement the recommendations, subject to Government decision. I am not sure if that is answering the question that was actually asked.

Fidelma Healy Eames (Fine Gael)
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Ms Murphy flagged a number of concerns that I think the Minister should act on. First, in my view the consumer code should provide information not only on the charges that are being applied but on what should have been charged. It is not good enough to tell people what they were charged; it should give information on what they should have been charged to see whether they paid too much. One is not really informing the customer. The purpose of a consumer code is to empower the customer.

Second, I am not clear on the issue of commission. Was a standardised commission applied across the same product, as should have been the case?

Ms Patricia Murphy:

I will deal with the question on commission. One of the findings of the report is that there was no universal approach to reflecting commission. With regard to individual products, I am not quite sure of the situation. One would need to examine the original raw data. The general conclusion was that there was no universal approach across products.

In response to the Senator's assertion that consumers should know precisely what they are paying for, I might ask Mr. Joe Morley from the Central Bank to comment further. One of the findings of the report was that there was no clear link between charges and the actual service being provided. That was part of the transparency issue - one could not necessarily tell precisely what one was paying for. Some of that is being dealt with in the consumer code.

Mr. Joe Morley:

We are engaged in further work at European level on the project on the package of retail and investment products, which is looking at all the information that consumers should get, including information they should get at the start, which would go towards providing standard simplified information which could be better compared across the industry. What we have done this year is to introduce the statement. Consumers would have been provided originally with the charges on the product.

Fidelma Healy Eames (Fine Gael)
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With respect, Mr. Morley, that is not sufficient. A person could have had a pension for 20 years.

Joanna Tuffy (Dublin Mid West, Labour)
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Will Senator Healy Eames allow Mr. Morley to finish? My understanding is that we are discussing the private sector, in which there are no set charges. The issue is whether the information on charges is transparent. I understand that one cannot say the charge for such a service must be X, because this is the private sector and it is competitive.

Fidelma Healy Eames (Fine Gael)
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There used to be such a situation.

Joanna Tuffy (Dublin Mid West, Labour)
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We should allow Mr. Morley to finish.

Mr. Joe Morley:

Certainly, companies are supposed to include the charges in the documentation at the commencement of a product. I accept it can be difficult for the consumer to make a comparison across other services but we found that out as part of the review. What we have tried to do is to introduce the statement so that the consumer can see, at the end of each year, information on the charges - information that was not previously provided. The situation currently is that all consumers get a current balance at the end of each year. This new statement will actually show what is going on during the year. It is something the Central Bank intends to examine during the year to ensure that statements in the agreed format are being issued. In cases in which a consumer had dealt with an intermediary, the consumer would be able to go back through the intermediary, who is subject to our code and has a responsibility to sell suitable products to the individuals.

Fidelma Healy Eames (Fine Gael)
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If he or she is still in business.

Mr. Joe Morley:

Of course.

Fidelma Healy Eames (Fine Gael)
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But if he or she is not still in business, what does the client do?

Mr. Joe Morley:

If the intermediary is not in business, there is nothing to stop a consumer from going to a new adviser who can help him or her out. That is still an opportunity. We have placed a requirement on firms to provide information on the statement. If firms are charging for items that are not on the original contract, we will have to investigate it. In such a case, in the first instance the person should make a complaint to the firm or to go to the Ombudsman. If we were aware that firms were charging for items for which they were not supposed to charge, I believe we would be obliged to take action.

Willie O'Dea (Limerick City, Fianna Fail)
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Let me clarify a few matters. I understand the code produced by the Central Bank is not binding but is a voluntary code of practice.

Mr. Joe Morley:

It is binding.

Willie O'Dea (Limerick City, Fianna Fail)
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What information does it contain? I understand it contains the amount the consumer invests and all the charges. Does it identify all the charges?

Mr. Joe Morley:

I think what it will show will be the total of the charges on the policy. Again, we have given the instruction in the code, but during this year we will be examining how exactly the firms are interpreting the rules we have. The rules are binding on the regulated entities. We will be investigating them this year to ensure that statements are being issued and see exactly how they are approaching the section on charges. The code states that all charges and deductions affecting the investment product, including any charges associated with the management, sale, setup and ongoing administration of the investment product, must be included in the statement.

Willie O'Dea (Limerick City, Fianna Fail)
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Will Mr. Morley come back to the committee with the result of that investigation?

Before I go to another meeting, may I make one more point? I take the Chairman's point on the private sector providing a competitive service, but in the PRSA area, which is also part of the private sector, there is a precedent for maximum charges. I think that should be applied across the industry. Transparency alone will not do it and it will take too long, but the situation is critical.

Joanna Tuffy (Dublin Mid West, Labour)
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Will the delegation comment on that issue, in addition to the issue raised by Deputy Ryan and me about the private pension fund levy and the way it is dealt with in the report? Deputy Ryan asked how the issue is being addressed internationally.

Ms Patricia Murphy:

The nature of the levy is that it did not come within the scope of the report. It is a temporary levy that was not imposed by the industry. It was not considered with the scope of the report.

That comes under the remit of the Minister for Finance and I have very limited information on it.

In the context of the position internationally, the situation in the UK was examined when the report was being compiled in order to see how Ireland compares. The findings in the report indicate that our occupational pension schemes compare quite reasonably with those in the UK in the context of costs. However, they also show that individual arrangements are likely to be more expensive than in the UK. The latter is currently moving to the NEST pension scheme and the charge relating to this is very low. On the occupational side, costs can generally be reasonable when compared to those in the UK. On the individual side, however, they are expensive.

Brendan Ryan (Dublin North, Labour)
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Are they generally above or generally below those in the UK?

Ms Patricia Murphy:

I can provide the Deputy with the specific figures but they are generally above those in the UK, particularly in terms of individual arrangements. On the defined contribution schemes, the comparator we used was the reduction in yield and this is 0.45% to 0.9%. The reduction in yield relating to the UK stakeholder pension is 1% to 1.63%. The typical charging structure for standard PRSAs is 1.27% to 1.57%. These are closer to the UK stakeholder pension and both are slightly less.

Joanna Tuffy (Dublin Mid West, Labour)
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Deputy O'Dea inquired whether it would be feasible to impose maximum charges.

Ms Patricia Murphy:

The point I made earlier is also relevant in that regard. It has been done for PRSAs. Ultimately, the difficulty with fixing a price is that it becomes the actual price and perhaps reduces competition. These are the points that are made in the report. The report also recommends that PRSAs - and how they fared - should be considered in greater detail. That would be helpful. Obviously, however, that would be a decision for the Minister and the Government to make in the context of policy in the future.

Joanna Tuffy (Dublin Mid West, Labour)
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I do not believe that the question Deputy Ó Snodaigh posed on whether charges could be applied retrospectively was answered.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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The report recommends that a regime of transparency be imposed in respect of schemes. When a person signs up to a contract, those in the industry often state that transparency is fine with regard to new products. Does Ms Murphy expect the industry to take the recommendations on board or can they be imposed on it? When voluntary codes were introduced in the past, they were not always complied with. Anything that makes the position in respect of charges and fees more transparent would be welcome. If a person has been signed up to a pension scheme for the past ten, 20 or 30 years, he or she may wish to work out whether he or she should continue to pay into it or whether there will be a huge drop in the amount he or she will receive annually upon retirement.

Ms Patricia Murphy:

Any amendment of the occupational schemes would certainly involve changes to regulations, as proposed in the report. This would mean they would have to be complied with and that they would also apply to existing members of schemes in order to bring them up to date in their information. So I suppose the answer is that one should get simple, straightforward and understandable information on the amounts one is paying now and on how these will ultimately be reflected in one's pension.

Marie Moloney (Labour)
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I was making a contribution in the Seanad so I missed most of the proceedings up to now. I will not pose many questions because I am sure most of the points have been covered. I can read through the transcripts in order to bring myself up to speed.

It may not come within the Department's remit, but what is the position with regard to people such as those who worked for Waterford Glass, who paid contributions to a pension scheme but were then left high and dry? Do such individuals have any comeback? Major charges are being imposed. Will Ms Murphy indicate what these cover? Do they have any impact on the people to whom I refer? Others to whom I have spoken have paid into pension funds for many years and are about to retire. They are concerned that their pensions will not be there when they seek to access them. I accept that those on defined benefit schemes should get a certain amount back but they are concerned that their employers do not have the money necessary to pay their pensions. If the company for whom one of these people works goes bust, what will happen to his or her pension?

Ms Patricia Murphy:

I cannot comment on individual schemes. What happens to schemes in wind-up phase does not come within the scope of the report. However, the report does provide information on costs relating to defined benefit schemes where companies sponsor such schemes. Those costs are generally borne by employers.

Marie Moloney (Labour)
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What is the position with regard to charges?

Ms Patricia Murphy:

They are borne by employers in respect of defined benefit schemes.

Fidelma Healy Eames (Fine Gael)
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We have had a good exchange of views and there has been good feedback. What will happen in the context of the feedback we are giving Ms Murphy vis-à-vis the report?

Joanna Tuffy (Dublin Mid West, Labour)
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I wish to ask a couple of questions. If the pension levy were being treated as though it were a charge on individuals who are paying into a pension fund, would that be appropriate or legal? A great deal of our interaction in respect of this matter is with pensioners or people who are paying into pension funds rather than with those in the industry. Ms Murphy referred to surveys of trustees, etc. Has the Department consulted individual customers? Were such customers involved in the subsequent consultation process? In the context of State agencies such as the ESB, could more be done to ensure that people who pay into their pension funds are not being overcharged and that these funds are being properly run? The State has a role in respect of those agencies.

Ms Patricia Murphy:

The Chairman's first point relates to the pension levy. To my knowledge, the legislation allows for the levy to be dealt with and it is the responsibility of the trustees of individual schemes to decide how the levy is imposed. This matter falls outside my particular remit but that is the position as I understand it.

We were not in a position to contact or consult individual customers in the context of compiling the report. However, information was obtained from the trustees who manage the schemes on behalf of their members. We carried out our research on individual pension arrangements with providers, life assurance companies and intermediaries. The consultation process is open so individuals can make submissions or any kind of response they wish to us. We would certainly welcome such submissions or responses.

The Chairman's final question was on trustees.

Joanna Tuffy (Dublin Mid West, Labour)
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I was inquiring about the pensions of people who are employed by State agencies.

Ms Patricia Murphy:

All schemes have the same structure. Under the Pensions Act, all schemes are obliged to have a structure whereby there are trustees who have responsibility - including fiduciary responsibility - for the management of those schemes. This applies to all schemes.

Mr. Andrew Nugent:

The trustee set-up for the schemes the Chairman mentioned is the same as that which applies to any other occupational pension scheme. We provided some guidance for trustees on the application of the pension levy. I am sure we could share that with the committee and we would be happy to do so.

Willie O'Dea (Limerick City, Fianna Fail)
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With regard to flexibility in the application of the 0.6% Government levy, Deputy Ryan asked if pension schemes had the type of flexibility that would allow them not to charge in one year and then to double up the following year. Do they have that much flexibility?

Mr. Andrew Nugent:

I am not aware that they do. I do not have that information with me but we could have a look at it.

Willie O'Dea (Limerick City, Fianna Fail)
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If I could be so presumptuous as to speak for Deputy Ryan, he asked a general question about how the pensions industry is doing. I will be very presumptuous and answer on his behalf. The pensions industry is booming and all the schemes are bust.

Joanna Tuffy (Dublin Mid West, Labour)
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Senator Healy Eames asked a question about the follow-up.

Fidelma Healy Eames (Fine Gael)
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This is a fine report. We have found some areas that could be improved. Where do the witnesses go with the information we have shared with them? How will they integrate that into improved practice?

Ms Patricia Murphy:

The report is a starting point because it is a fact-finding exercise. Regarding the conclusions, the recommendations and all the input we have received, including the input from today's discussions, we are due to return to Government with the report and the outcome of the consultation in recent months.

Fidelma Healy Eames (Fine Gael)
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So the feedback will be incorporated into this?

Ms Patricia Murphy:

It will be, yes.

Fidelma Healy Eames (Fine Gael)
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That is good.

Joanna Tuffy (Dublin Mid West, Labour)
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I think we have covered all the issues. I thank Ms Murphy and the other officials for attending. We will forward details of this meeting to the Minister also. If the witnesses have any further questions or if they could come back to us on the issues raised, we would appreciate it. I thank them for attending.