Dan Boyle (Cork South Central, Green Party)

I welcome the tabling of this amendment by Deputy Bruton on Committee and Report Stages. It is important in the context of the Finance Bill that we initiate this debate which takes place outside the House but painfully slowly. There is no doubt that there are great inequities within the pension system, both in the scale of the State pension and the level of private pension provision.

The best means of encouraging private pension provision is through tax reliefs. Deputy Bruton, in moving the amendment, and Deputy Burton illustrated the major inequalities in the system. I welcome the amendment in that it would introduce a degree of equity in the short term. I also agree we need to initiate major change in how we encourage private pension provision. We received a report from the Pensions Board and anticipate a Green Paper. My party has contributed to this debate. A matching contribution scheme would have a greater take-up and degree of equity than the system of tax relief on private pensions.

In asking my parliamentary question last November, I was specific about the information I required. I sought information only on those who had made applications to the Department for pensions funds to be considered and awarded subsequent to the placing of the €5 million cap in the budget of 2006. The information the Minister gave me then which he outlined on Committee Stage was that 116 people had applied, of whom 74 or 75 had been given permission. This figure may have risen above 80 at the time we dealt with Committee Stage. The general information was that the average pension fund of the group of 75 was €8 million; the highest pension fund was €20 million. The Minister subsequently highlighted that personal pension funds which were larger than €20 million may have been in the system prior to the application of the €5 million cap. It would be helpful if he outlined the information on how many pension funds are in existence which the State supports by way of private tax relief which are more than €20 million and what is the size of those pension funds. The benefit payable on a sum of €20 million amounts to approximately €5 million on the part of the State.

The Minister also gave figures on Committee Stage that a pension fund of €5 million for someone retiring at the age of 65 years would produce an annual pension of approximately €110,000. Even at the lower cap, this is three times the average industrial wage. Why do we have a pension policy which gives such State support to such pensions when at the lower end of the scale we have such uncertainty and so many people have no private pension cover whatsoever?

It is clear this system is in need of drastic reform. I am confident that when the Minister for Social and Family Affairs releases his Green Paper, he will suggest and promote a matching contribution scheme instead of matching tax relief. I do not know what prior consultations he had with the Minister for Finance or what agreement he is likely to reach with him but we cannot continue in this way and must act in an more equitable manner. That said, the amendment proposed by Deputy Bruton would deal with the system we will have in place after the budget and the Finance Bill. It will not change during the next 12 months. If we have an opportunity to change it now in the short term to make it more equitable, the House should grasp it.

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