Enda Kenny (Mayo, Fine Gael)

When the Government took office earlier this year, it inherited a pensions system in crisis. There is a €10 billion to €15 billion hole in certain private sector defined benefit pension schemes. This has been clearly identified, as has the extent of the fat and costs involved in their administration, a matter also referred to in the programme broadcast last night to which the Deputy referred. The Minister for Social Protection, Deputy Burton, announced this weekend that her Department is initiating a study with the Pensions Board and the Central Bank on the level of pension charges and the expenses associated with the different forms of private pension arrangements. The Minister is determined that employers and members of pensions schemes will get value for money. Everybody can support that. The Government launched this study because of concerns about the level of charges applied to schemes and the lack of transparency around some of them.

I met some of the workers from Tara Mines during a recent visit to Navan. They brought their case to me and I will speak further with them. There are two sides to the story. The study which the Minister has initiated will examine charges in defined benefit pension schemes, which cover approximately 222,000 people, and charges in defined contribution schemes, which cover 260,000 people. It will also examine retirement annuity contracts and personal retirement savings accounts. It is important that people know how much they are paying in charges and what they are getting in return.

The study initiated by the Minister will give comprehensive and clear information on the categories of charges that apply across and within pension schemes. The findings of the study will be essential to informing the debate and determining whether further measures are required. The initial results are expected by December 2011.

The Financial Times recently reported that some pension savers are losing more than one third of their savings as a result of high charges on certain pension products. I regard that as a disgrace. Other research suggests that a 1% annual fee can reduce the pension pot by 20% in respect of a customer who pays in over a lifetime. I am sure Deputy Martin will agree that we need to get an accurate read on these matters if we are to deal with the extent and scale of the problem. There is a commitment in the programme for Government to cap taxpayer subsidies for all future pension schemes that deliver income on retirement of more than €60,000. This is a matter of considerable anxiety.

The Deputy asked me why the Government introduced the scheme when we did. The scheme was introduced as a temporary measure on foot of the Government's determination to create a jobs initiative. This initiative also involved renegotiating with the troika the memorandum of understanding and the introduction of reduced levels of PRSI and VAT, which had a direct impact in terms of employers finding it easier to keep existing staff and hire new people. The results are self-evident across the entire hospitality sector in that people were maintained in employment and new people were taken on. That was the reason for the introduction of the temporary pension levy and, as last night's programme clearly indicated, the administration charges imposed by pension funds can absorb the vast majority of the temporary pension levy.

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