Brian Cowen (Laois-Offaly, Fianna Fail)

I do not agree with the basic contention outlined by the Deputy. I introduced measures in this year's budget and Finance Act to limit the Exchequer cost of tax relief on pension contributions by high earners while encouraging those on lower incomes and older workers to make provision for or improve their pension arrangements. A pension is deferred income. The issue relates to the benefit to the economy, which is operating at full capacity at present. To have direct income earned at present become future spending and consumption is good for the economy in terms of its inflationary impact, and we know the biggest enemy for people on fixed incomes is inflation. One must consider the whole macroeconomic effect of what one is doing.

It is important that people are allowed to provide for their future pensionable retirement. To do so is a responsible act of citizenship by parents and workers. I accept that historically many people have not regarded private pension provision, beyond the basic State pension, as being for them. We know of the attractiveness of the SSIA scheme for people across all socio-economic scales. It was directed towards people who were not in the habit of saving due to having limited disposable income. However, we brought forward a scheme that has inculcated a culture of saving, which I understand is continuing following the first four or five months of maturation of the SSIA scheme.

One must wait until the full range of the 1 million SSIA accounts matures towards the first half of next year to know the ultimate picture. However, anecdotally, from contacts with financial institutions, the indications are that up to 65% of the total payable on maturation of the SSIA schemes of ordinary workers and people throughout the community who took on that attractive option is being reinvested. It is not a question of it all being disposed of. This accords with common sense, given that people see the benefits of a savings culture. Therefore, we have a higher savings ratio than we had some years ago, despite the record investment taking place in the economy.

What I tried to achieve with the scheme I brought forward last year was to further incentivise people so they would invest in pension products in a way that many of them had not done in the past. That is a real social gain and one we should pursue. In the case of people with earned income who wish to make provision for their pension, we should incentivise them to do that. It is better to have some deferred consumption to ensure the overall macro-economic health of the economy rather than for every income earner to consume according as he or she earns, quite apart from the former being a responsible thing to do.

The vast majority of tax reliefs are not the ones highlighted but those received by ordinary workers, parents and householders in the form of mortgage interest relief. That is the case because we want to direct people into home ownership and ensure people can arrange to build and live in their own homes if they so wish. Tax reliefs are not in all cases a bad thing, as sometimes becomes the hinterland of this type of debate. Tax reliefs can be good measures that bring social gains and personal benefits and as a function of benefit, the level of one's disposal income is a factor. As a result of the SSIA scheme and the recent initiatives I introduced in the last budget a new cohort of people who traditionally did not consider this to be an area in which they would become involved have been encouraged to do so. That is a good thing.

As the Deputy said, in the context of social partnership, we are providing increases well beyond inflation as a result of the resources available to this Government. Pensioners and other people on fixed incomes are those who most depend on me on budget day. We have a good record in that respect and although we have more to do, we are meeting the targets we set in the social partnership context.

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