Brian Cowen (Laois-Offaly, Fianna Fail)

I am not opposed to that general approach. I do not understand why certain categories are denied choice, particularly if others have it. I understand the logic of the Deputy's argument. Reforms will be required in order to make pension provision more attractive. Too often the question is asked as to why more people on lower incomes are not involved with pension schemes. The answer is simple in many respects — they do not have enough money. In basic terms, a pension is a deferred income. If one is struggling to survive on a particular amount of income at present, it is extremely difficult to make plans for the future. People also ask why we do not have greater pension coverage, etc. Arriving at an answer in that regard does not involve rocket science.

There are those who are of the view that we merely need to put in place reforms and then everyone will have access to a pension. One needs a disposable income over and above that relating to one's existing responsibilities and commitments in order to provide for a pension. Many have used the pay related social insurance system, through a weekly PAYE contribution, to build an entitlement to a State pension when they reach retirement age. We have been successful — I do not know if we can continue at the rate we are going, particularly in the light of demographic changes — in providing a pension that covers the basic necessities of life. The challenge we face revolves around the extent to which we can provide a means to encourage people to supplement this basic pension by making provision now for when they retire.

The financial services industry will be obliged to provide more diversified and imaginative products. It is not a captive market. The old idea of local insurance men — be they from New Ireland Assurance or Hibernian Life, etc. — collecting a few bob from each house is long gone. That is what happened when I was young. People required particular prudence and foresight to be able to make such a contribution.

Everyone refers to the need to introduce reforms. We are committed to reforming the system and a great deal of work is being done. There is a major actuarial exercise that must be undertaken and this would need to be accurate and well considered. The Department of Finance will be considering that aspect of the equation, even as others refer to reforms and arriving at solutions.

The Deputy made a more general point regarding how pensions have been structured over time on foot of the cohort who are interested in investing in them. He has also referred to the fact that, statistically, the benefits that are derived are greater for those individuals than they are for others. The basic point is that there must be income available to allow people to provide for pension coverage. I would love everyone to have sufficient income in order that we could all enjoy pension coverage. However, as much as we are trying to spread opportunity and prosperity, the reality to which I refer remains for many.

This is an area in respect of which one must be able to predict what will happen to each part of the matrix in order that what evolves will be better than what currently in place. As the Deputy is aware, a certain proportion of the evolution of pension policy is not based on the continuation of defined benefits regardless. The latter comes about as a result of the life expectancy issue and how this feeds back into actuarial costs and product development in the first instance. Cognisance must also be taken of what is affordable and sustainable in the context of employer contributions, etc.

It is not that one is overwhelmed by the science involved but the more one examines this issue and discusses it, the more one becomes aware of the fact that we must proceed in a systematic and comprehensive way in order to include as many as possible. I am not stating there will be unanimity in respect of the outcome. However, in the light of the importance of this issue for everyone, including workers and their representatives, people must be given an opportunity to participate and offer ideas as to how we might proceed. Although people criticise the time it is taking, its complexity is such that it should take some time.

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