Mary Hanafin (Dún Laoghaire, Fianna Fail)

Regarding annuities, this is not just another report. It was carried out on behalf of the Department of the Taoiseach and its findings on the cost of annuities were upheld by other professional bodies. The report by Indecon, entitled Life Strategies, helped to guide our thinking on this matter. It highlights that some savings could be made, particularly on commission. It refers to the cost of capital being 6% and how, if the State took it over, there would be a more conservative mortality estimate. I do not know why it is believed the State would take a more conservative estimate about longevity than anyone else but this would amount to 5%, with profit at 3%. Commission would account for another 3%. Indecon suggested that, if the State were to take over the purchases of the annuities, there could be a saving of 18%. The Irish Association of Pension Funds estimated this figure to be 15%. These issues must be examined.

In effect, the annuity for a €10,000 per year pension costs €222,000 and any saving, whether 10% or 18%, would go back to the pension. These are the issues we are examining. The national pension framework is being considered by the Government and we are examining various issues. The State is not in a position to take on a potential liability of €30 billion for all pension funds. That figure is the liability if all funds were to close tomorrow. There is no indication this will happen. Many people who are worried about their pension funds will have time, over their working lives, to allow the pension fund to pick up again.

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