Mr. Aidan McLoughlin:

I will summarise my paper, the text of which, hopefully, the members will have seen. I would make a few general points. There is a crisis in the pension system. As the OECD report confirmed, over the course of the next few decades we will face a €324 billion hole in our social welfare system if further changes are not made, and some of the changes already outlined are factored into that. Therefore, something needs to be done. Put simply, the benefits cannot be paid at the same level unless we adjust something. Auto-enrolment is a positive measure, as Mr. Ciarán Phelan said, but it does not fix that problem; it would only fix it if the benefits in auto-enrolment were used instead of some of the social welfare benefits that are being paid to date. It is important to realise that it will only work if we were to cut social welfare benefits. Kicking the can down the road is not an option as that would cause more difficulties in the future.
The point has been made, and it has been reflected in the OECD report, that pensioner poverty in Ireland is currently low based on historical numbers. However, in the paper I outline a number of steps that have been taken in the recent past that will substantially increase pensioner poverty. As Mr. Fergus Whelan has outlined, those chickens will come home to roost in the future. We must recognise that basing it on historical numbers does not give us a real appreciation of the degree to which changes made in the recent past will cut benefits available to pensioners and significantly increase pensioner poverty in the future.
In the White Paper three adjectives are used in terms of benefits, namely, "safe, adequate and sustainable". Focusing on each of those in turn, we have a number of suggestions to make. In terms of safe pensions, we think that the biggest threat to pensions in Ireland at present is the State itself. People will not feel safe about their benefits unless that is addressed. Our suggestion is that it needs constitutional protection. Something should be written into the Constitution to give people the comfort to save over a 40-year period knowing that the benefit will not be subject to some form of confiscation, taxation or other imposition as they near retirement, as we have seen happen in the recent past.
Second, the scale of the problems here is such that we need a long-term plan. This is not a plan that can be delivered in the lifetime of any government, we need a 50-year plan to be able to deal with the issues. Pensions are an extremely long-term issue. One saves for 40 years and one could draw benefits for another 30 years. Therefore, a long-term plan is needed. We need somebody to be in charge of that plan, a pensions Minister. Each time we look to a foreign jurisdiction for guidance, be it Australia or the United Kingdom, we note that they have had pension ministers in charge. It helps drive through the process. There are too many Departments involved and sometimes the good work of one Department can be undone by the activity in another.
In terms of adequacy of pensions, auto-enrolment will help. We recognise there has been delayed implementation of it due to the current economic environment. We think the Government should put forward when it will be implemented and what it will consist of in order that people can start planning now even if it is a number of years before it takes off. We think the contribution rate needs to be significant to be of benefit and, by that, we mean double digit contribution levels combined between employer, employee and the State. The system must also include the self-employed. While it is quite comprehensive in all it does, everything is presupposed around the employees. As we saw in recent times, much of the employment is coming from the self-employed. They are a significant part of the economy and they are equally entitled to be pensioned. As Mr. Ciarán Phelan has said, our tax reliefs system needs to be managed better to encourage that.
In terms of sustainability, the key features here are both our social welfare system and public sector pensions, both of which have been subjected to some change. However, as the OECD pointed out, it has not been sufficient to fix the problem and further work needs to be done. Simply put, we have made promises - we have written cheques as a State that we cannot cash. The combined exposures in this respect are €129 billion currently in the public sector and €324 billion for social welfare. They dwarf the national debt about which we spend so much time worrying. The problem is that these numbers are not regularly tracked, checked and dealt with. We believe a pensions Minister with responsibility for showing improvement in those over a long period is the way forward.