Séamus Brennan (Dublin South, Fianna Fail)

I propose to take Questions Nos. 6, 13, 23, 44, 61, 71 and 90 together.

It is Government policy to encourage people to participate in occupational and private pension arrangements so they can, when they retire, maintain their pre-retirement standard of living. To this end, a range of measures has been introduced in recent years, including personal retirement savings accounts, PRSAs, mandatory employer PRSA access where occupational schemes are not available and an ongoing national pensions awareness campaign.

On overall occupational and private pensions coverage, CSO figures for the first quarter of 2004 show that 52.4% of persons in employment have a supplementary pension. Of a national workforce of some 2 million people, an estimated 900,000 do not have a private or occupational pension to boost their incomes in retirement. The key target group for Government action in the supplementary pensions area is those who are 30 years of age and over. The national pensions policy initiative suggested that up to 70% of this group will need to supplement their social welfare pensions to maintain living standards in retirement. The most recent CSO figures suggest that 59.1% of people in this group have the necessary pensions cover.

There is no doubt that progress on pensions coverage is being made given that, in recent years, there has been a steady increase in the number of people taking out PRSAs and in those participating in occupational schemes. The most recent figures from the Pensions Board show that just over 55,000 PRSAs had been taken out up to the end of June 2005. However, overall pension coverage is increasing at a lower rate than is desirable. The reasons for this are many and varied and include, for instance, issues of affordability and the fact that many people feel they are too young to consider pension provision.

As the House will be aware, in February of this year I asked the Pensions Board to commence work on a comprehensive review of our overall pensions strategy in advance of the original timeframe of September 2006.

The review encompasses an examination of the main strategic recommendations contained in the national pensions policy initiative, including those relating to the adequacy of income in retirement, coverage targets, levels of social welfare pensions, sustainability of State pensions, including public sector pensions, and the tax support for private and occupational pensions.

The review is also examining the question of alternative ways of addressing adequacy and coverage issues, including the question of mandatory provision. The role the State might have in future pensions provision is also being examined.

Mandatory pensions can take a number of different forms. In many countries, particularly in the EU, the state plays a central role in the provision of compulsory supplementary pensions. In other countries, the requirement can be for a person to participate in an occupational or private sector scheme. A variation of the mandatory system was introduced in New Zealand earlier this year and involves automatic enrolment of a person in a scheme with the option available to withdraw if he or she wishes. I understand this type of initiative, known as a "soft mandatory" option, is also being considered in the United Kingdom. As it is a relatively new concept in pension provision, it is difficult to say how successful it might be in dealing with pensions in an Irish context. However, the Pensions Board is looking at the system as part of its overall review.

On incentives generally, I am aware of the potential of maturing SSIAs as a way of increasing pensions coverage and I have also asked the Pensions Board to consider how we might tap into the savings habit that has been created to develop attractive pension-based savings initiatives. I understand it was in this context that IBEC put forward its proposal on incentives for pensions provision. It has suggested that the contribution limits allowed for tax purposes be lifted to facilitate the transfer of SSIAs to pension schemes.

Work on the Pensions Board review is nearly complete and I expect to receive the final report within the next couple of weeks. At this stage, I am not proposing any particular measures but I will consider the conclusions of the Pensions Board very carefully and consult my Cabinet colleagues on the way forward.

Internationally, governments are trying to deal with the challenge of funding pensions for an older population who are generally living longer and healthier lives. The Irish position is by no means in crisis. The demographic trends are to remain favourable for the next ten years or so and this allows us time to address the issues concerning our pensions system. It is essential, however, that we take action sooner rather than later so we can deliver on our commitment to ensure an adequate retirement pension for everybody.

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