Joan Burton (Dublin West, Labour)

Last Sunday's edition of The Sunday Tribune carried a front page story of a leaked memo from the Minister for Social and Family Affairs, Deputy Hanafin, to Government that there is a potential deficit on certain private sector pension funds of between €20 billion and €30 billion; that the majority of defined benefit pension schemes are probably in deficit because of the fall in the value of equities and that many pension schemes are at risk of being wound up.

As there are approximately 250,000 employees and 90,000 pensioners in defined pension schemes, it is understandable that the leaking of the memo caused grave concern to workers and pensioners in such schemes. The subsequent statements by the Minister, Deputy Hanafin, in media interviews did little to allay fears. The Minister's suggestion that people would always have the State pension to fall back on anyway was insensitive to say the least. During its 11-year reign in power, Fianna Fáil has continually talked about pension reform but done nothing.

In terms of the immediate crisis facing pension schemes, a number of suggestions have been made by the Minister and some of her colleagues, among others. One suggestion was to extend the period by up to two years on the requirement to purchase an annuity for people about to retire. The second was a relaxation of the current rules governing defined benefit schemes to allow a breathing space in the context of depressed equity markets. Is it the Government's intention to implement either of those two proposals to give some relief and space for people coming of pension age at present and funds that may have particular short-term difficulties?

The Government's failure to reform pensions is on a par with the model of regulation that it chose for the banks — regulation with a light touch, which has left many workers dangerously exposed to their pensions losing value. The Government has offered generous tax breaks for investments in pensions. However, for many ordinary workers on modest wages in the private sector, much of the tax relief has been eaten up by the high level of charges the Government has allowed for pension schemes in Ireland, unlike in other European countries. Prudent fund management would dictate that as workers approach retirement age, their funds should be invested in less risky investments such as Government-backed bonds. However, since Charlie McCreevy's time, the Government has been encouraging and permitting pension funds to invest more and more in equities. While this was a way of boosting profits while stock markets were running high, it now leaves many coming up to retirement age perilously exposed to the collapse in stock market prices.

The Government can be accused of encouraging both pensioners and pension funds, through the attractiveness of tax breaks, to take unnecessary risks. Now that, unfortunately, those risks have materialised, it is extraordinarily high handed of the Minister for Social and Family Affairs to wash her hands of the issue and casually remark that "most of these people would have a State pension — €230.30 per week — and the State pension is a good guarantee to fall back on". That smacks of Marie Antoinette and her advice to the peasantry of pre-revolutionary France, "Let them eat cake".

I want the Government to put on record tonight what concrete proposals it has to protect the tens of thousands of workers affected. We need a national solution to the problem. People need a pension for their retirement. It is right for the Government to encourage people to save and invest wisely for their retirement but the Government has created extraordinarily attractive schemes for the high rollers and the multimillionaires to invest in pension funds but, unfortunately, many middle income workers have been left far behind the high rollers.

The time for Government PR, Green Papers, discussion documents and task forces is long past. We need a Pensions Ombudsman with much greater powers to protect workers in schemes. We need an immediate response from Government to address the difficult issues facing people due to retire in the short term, and those pension funds that the Minister has indicated in her memo are at risk.

I welcome the fact that the Minister is in the House tonight because it is important that she put some positive statements on the record and tell us whether the Government will permit the extra two years for the purchase of annuities. Will the Minister provide an active mechanism for pension funds to vary some of the conditions in the context of the current depressed equities market?

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