Joan Burton (Dublin West, Labour)

The Minister must have been surprised to receive several hundred applications from people with very large individual pension funds. I refer to the small self-administered pension funds referred to as being small because they apply to an individual, not because they are small in size. However, hundreds exceeded the Minister's €5 million limit. If I recall the figures, he told Members that for someone earning a gross income of approximately €300,000, a pension fund of €5 million would be appropriate and possibly necessary. He provided certain figures for Members that I would appreciate receiving from him again.

There is a highly attractive set of arrangements for those who are directors or owners of companies. The position of such persons in respect of tax becomes highly attractive if they put aside large amounts or their companies make significant contributions to their pension funds. This is because from a tax perspective the State encourages the building up of funds of up to €5 million for personal pension schemes. In the main, people in ordinary employment cannot avail of such funds or schemes. This is certainly true for those at the bottom of the scale.

Deputy Bruton's amendment refers to persons on or below the 20% rate of tax and proposes that the tax structure should be modified to give pension inducements to all, not simply to those few in the golden circle at the top of the pyramid. The Minister told Members on Committee Stage of individuals who had accumulated pension funds of €10 million, €20 million and in a couple of cases, if I recall correctly, sums far in excess of €20 million. The ordinary person will consider that this attractive regime is for the benefit of very wealthy individuals, particularly when one bears in mind that the pension funds of the individuals concerned are most unlikely to include their principal private residence. This scheme probably applies to those who have a net worth of €100 million or more.

From the reform perspective, this constitutes an argument for an alternative Government. The former Minister for Finance, Mr. McCreevy, introduced significant changes in respect of pensions and pension regulations. He made no bones about the fact that they were to benefit those whom he met at the races, in the tent at the Galway Races and so on. It was not for those to whom the Taoiseach referred last week as Joe and Mary Bloggs who, apparently, can share the same consultant in the Mater Hospital as Mr. Desmond or various other extremely wealthy people. The former Minister was clear that the changes were intended to benefit those at the top.

Members have had a discussion on how to reform the tax system on an ongoing basis. The Labour Party has proposed the establishment of a standing commission on taxation, as all parties in the House agree that it is an absolutely desirable element of public policy to encourage people to save and provide for a pension. All agree on this point, as they do that the PRSI system, or the superannuation system for those in State employment, should provide a contributory mechanism, whereby people can build up pension entitlements. Thereafter, however, their approaches differ. The Fianna Fáil provision is entirely lopsided and meant for those at the top. The more money one has or the bigger one's company, the greater the contribution that can be made to one's pension fund and the bigger the tax break one receives. The cap introduced by the Minister last year was extremely limited. One key reform item for an alternative Government would be to offer reform in respect of pensions.

The SSIA scheme has demonstrated a considerable appetite for saving. This is because people have become more prosperous and, more particularly, because the Government gave a significant bonus for every euro saved. The same would be true with regard to pensions. It is extremely difficult to understand why people on modest incomes who can only spend a limited amount of their income and make contributions of €1,000 per year towards their pension fund will only receive tax relief of €200 or 20%, while the relief on a €5 million contribution made to someone's pension fund by his or her company comes to 41%.

This is one of the hidden stories, with many of the other incentives introduced or widened by the Minister's predecessor. Pension schemes date back to time immemorial. The former Minister for Finance, Mr. McCreevy, opened the floodgates and made the schemes much more attractive to those in the very top income and wealth ranges.

As I stated previously to the Minister, many women who left the workforce have no pension entitlements. Many young people who work in the construction industry do not build up any pension contributions. The Minister should reform this area. I hope when there is a change of Government, this will be one of the key issues for a new Government to tackle in a reform agenda.

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