Joan Burton (Dublin West, Labour)

I move amendment No. 19:

In page 50, between lines 12 and 13, to insert the following:

"16.—Retirees partaking in a private pension scheme may postpone the purchase of an annuity for up to two years.".

It is one of those delicious ironies of the parliamentary draftsman that the previous amendments concerned the Minister's decision to reintroduce a remittance scheme for highly paid people coming into this country, where only the first €100,000 of their income would be subject to tax. Any tax they paid over and beyond that is to be refunded. On the other hand, amendment No. 19 attempts to address the situation relating to the pension funds of tens of thousands of people. Following the Minister's predecessor's — Charlie McCreevy's — deregulation of much of the pension regulation here in order to let people make up or invest in their own pension fund and then purchase an annuity, many people followed that process. Many of those pension funds are now in crisis.

A proposal has been made, which I understand has been accepted in principle by the Minister, that people in a defined contribution pension scheme should not be required now, as normally required, to purchase an annuity when they come to retirement age. The Minister must bear in mind that, unfortunately, many of these schemes, as a result of what has happened in capital and investment fund markets, are worth only a fraction of what people reaching retirement age expected them to be worth.

The Government, through the Minister for Social and Family Affairs and all its Ministers for Finance over the years, encouraged people to invest in the private pension fund sector. My amendment seeks to provide some flexibility for these people so they can salvage something from the situation. Many people of relatively modest means who have worked hard all their lives put their money into a pension scheme and were encouraged by the Government to do so. They were encouraged by a Government which has also, through the kind of political economic structure it has developed, encouraged the disappearance of defined benefit schemes. Significant numbers of companies have closed such schemes in favour of defined contribution schemes.

We did not expect that Irish pension funds or funds in which Irish people looking forward to retirement hold their money would be subject to the kind of dramatic fall they have suffered. Therefore, my amendment urges the Minister to announce, as he has indicated he may do, flexible arrangements with regard to the requirement to purchase an annuity. I see no reason the Minister cannot be positive and make this arrangement and announcement now.

With regard to the regulations governing the employers' side of defined contribution schemes, we know that under technical regulations, many of these schemes will be in default if the stock market continues its current trend, because employers are required by law to top up the contributions to an appropriate level to keep the fund viable. Again, we have suggested that the Government should state clearly the position in this regard.

I am aware that the Minister for Social and Family Affairs, Deputy Mary Hanafin, has suggested on several occasions that she is agreeable to making this change with her colleague, the Minister for Finance. However, there is currently no certainty for people about to retire as to the situation. People who ring up to inquire about their pension funds can get no hard information or advice in this regard. They do not know what will happen if they reach the age of 65 in January or March or whenever. In the normal course of events, these people would, by law, be required to purchase an annuity within a short period of time.

I urge the Minister to accept the principle of this amendment. More importantly, he should set out clearly what will happen with regard to those people who are living in fear and dread. They do not know what has happened to the money they invested in good faith or what will happen them now with regard to their pensions. The Government is going to provide up to €10 billion for bankers who have behaved unbelievably recklessly, but there is much less certainty about what it will do for people on trolleys in accident and emergency units where services will be cut or for people who in good faith put their pension funds into investments. They had no other choice but to do so, because they were required by their employer and encouraged by the State to do it. Will the Minister indicate clearly where they stand now?

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