Richard Bruton (Dublin North Central, Fine Gael)

I move amendment No. 16:

In page 60, between lines 12 and 13, to insert the following:

"25.—Part 30 of the Principal Act is amended by inserting a new section:

785.—A person who reaches retirement under a Defined Contribution Pension Scheme shall from 1st March 2010 not be required to purchase an annuity unless they do not have an income equivalent to the Non-Contributory Old Age Pension prevailing at the time of retirement.".".

I did not get a chance to address this matter on the last occasion as I was not present. It continues to cause concern in that defined contributions are treated differently depending on whether they are made by PAYE employees or self-employed people. Self-employed people have considerable options in regard to how they handle the pension fund available to them when they reach retirement. However, PAYE workers, who cannot use the various funds available to the self-employed, find themselves forced to purchase annuities. Recently the Minister, in recognition of the difficulties arising in respect of some pension funds, sought to use the State's ability to give better value for money in terms of annuities.

There is a legal anomaly associated with the requirement to buy annuities. I am not sure of its purpose other than to ensure people will not blow the whole fund. I am not sure of its exact purpose, but it does seem to be an undue restraint on pension provision for ordinary workers compared to people who are self-employed. The provision is similar to the one I understand applies to the self-employed: they are free to operate these funds once they can show they at least have a non-contributory old-age pension to support them through the rest of their lives. If one shows one has a baseline level of support, one will not be required to buy these annuities, which are particularly bad value at the moment. I put this forward before and was told it was never an appropriate time to do this because we were about to see a great opus on pension reform. However, the years have gone by and the great opus has not landed on my desk. Thus, as an interim measure, there is nothing to be lost by implementing this change.

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