Mary Hanafin (Dún Laoghaire, Fianna Fail)

They are just being moved down the list of priorities. It is absolutely right that at the moment workers are paying into a scheme that guarantees the pensions of existing pensioners. In one third of schemes, increases for those pensioners are also being guaranteed. The workers themselves will not even get what they thought they were going to get. It has actually become the case that the workers are subsidising the increases of the pensioners, as well as the pensions themselves. The pensioners will continue to be the first priority. While the pensioners' increases are also a priority, they have moved down the scale so that the workers can get slightly more out of it.

I wish to comment on the scheme being established. The National Treasury Management Agency is satisfied that it has sufficient in-house expertise to set the prices for the pensions insolvency payment scheme. The administrative payment arrangement to be put in place by the Department of Finance will use the existing Civil Service payment structures. No new great administration will be attached to this. I was asked why the new pensions insolvency payment scheme will not pay the increases. If the fund is in deficit one can presume that the increases will have moved further down the priority order so that only the basic pension will be paid because the aim will be to ensure the workers will try to make the savings out of this. Deputy Morgan asked where the savings will come from and other Deputies mentioned the cost of annuities on which there is a high commission and profit. More particularly, they must be backed up by assets which are held but the State will not have to do that so there will be savings for the State which will continue.

There is no particular reason it should be three years instead of five or four but that is a reasonable time within which to assess how it works, whether it works well and to review the economic situation. It is being applied only in a narrow way and it is important it is only for the companies that are insolvent and for the pension funds which are in deficit because it is intended as a last resort. We had to be conscious of questions that would arise here about state aid and competition issues but we are satisfied that because it is so narrow we will not fall into the trap of being accused of giving state aid or favouring any companies in this way. In the same way, under competition legislation, we want to ensure that because it is limited and for a specific purpose we will not be abusing a dominant market position. We also need to keep the scheme quite narrow because we do not want employers to walk away from their responsibilities and the State cannot take on all pension schemes. Particular circumstances arise when the company is insolvent and the pension is in deficit. That is why we are doing this for these groups.

Deputy Shortall spoke about the Robins case. When the Commission reviewed the transposition of the directive, it gave an assurance that Ireland had adequately transposed the provision in that directive. Since the Robins case, however, the implications are being considered seriously in consultation with the Attorney General and with other relevant Departments. The Commission is involved too and has been in touch to know what is happening here. It is conducting its own review. In the past two weeks it published a call for tenders to examine the protection of supplementary pensions in cases of employer insolvency of defined benefit schemes and it thinks that will take approximately nine months to complete. That issue is being considered at European level too.

Deputy Shortall asked how much was being spent on tax reliefs. It is €2.9 billion. That applies to all taxpayers, including those on 20% and on the top rate. That is the value of the tax reliefs.

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