Bernard Durkan (Kildare North, Fine Gael)

I am pleased to have the opportunity to speak on this Bill. This is an important issue with wide implications. Many issues have been touched on by other speakers. We have been informed about demographic changes for years and that by 2035 there will be a serious problem in the country. We did not realise there were other economic issues at the time which would impact on our ability to meet pension requirements in future.

One presumes people will have to work longer but it is easier for some people to work longer than it is for others. Some may find it difficult and this is why I make the qualification. As part of our ordinary constituency work we all know of people who might be the same age, some of whom may be perfectly capable of continuing to work but others who may not because of their physical or medical condition, and this should be borne in mind. The pensions of the future must cater for people in this category such as, for example, those who must take early retirement due to ill health. It will not necessarily mean that the obligations of the State or public or private pension funds will be able to opt out. They may have ongoing responsibilities with regard to payment in future.

There is considerable concern among the public, public servants and the private sector because thousands of people have lost their pension entitlements since their pension funds went down the drain. Such people have no pensions but will depend on the State pension at some stage in future. This is the case in the private sector. This is widespread and many such people were encouraged to take out private pensions or life assurance in conjunction with an endowment payment. They were encouraged to do so in business to qualify for various loan entitlements or whatever. That has all gone down the drain and such people have nothing, a situation of some concern. This affects many people in the private sector who we may not necessarily recognise as being vulnerable in this area. Some ten years ago, such people had reasonable prospects and a reasonable pension fund lined up, but now they may have nothing because the pension fund may be broke, like many other things. As a result, such people may be vulnerable and this is a concern from their point of view. We should be conscious of this group which has been affected negatively by the downturn in the economy and the financial collapse. The State must pick up the responsibility for them at some stage in future.

Let us consider those in the public sector. As previous speakers have stated, they are now the whipping boys for those who believe that they are the cause of all our ills and ailments. This is simply not true. A weakness in a society can be determined by the degree to which society as a whole is prepared to share the burden of responsibility and everything that goes with it for any catastrophe that comes down the track. In other words, the last thing a society should do is to attempt to throw the blame onto someone else on the basis that one may feel better about it and one believes one has no responsibility and need not account for anything. That is a dangerous route to traverse. It has been tried by several people, for what purpose I am unsure, or rather I know why, as does everyone else. It is something about which we must be careful.

In the past there was a reasonable degree of certainty to which we could plan for the future and engage in forward planning. At the end of the working life of the average person, there would have been something upon which they could rely in more vulnerable years. It is important to reiterate this now because some people are scared at the moment. They may have had their private pension funds eroded dramatically or, in many cases, it may be gone altogether. Such people are looking at the prospect of depending on a State pension.

They may not qualify for a State pension and are worried by difficulties with qualifying for a medical card, the provision of services, local charges and so forth. Opposition Deputies will say this is appalling and awful without having due regard to the fact that certain things have been thrust upon us over which we do not have any control. We cannot simply opt out by arguing that these burdens have been imposed on us by the European institutions and International Monetary Fund. If this was a game of strip poker, some of those who are making suggestions which appear easy and attractive would have been down to their socks long ago. We know what problems lie ahead. We did not want to be in this place but we are in it and must plan our way out of it.

The age profile of the population is not as bad as is often argued and compares reasonably, and in some cases exceptionally, well with other European countries. We will have a substantial working population for some time. I hope our economic circumstances will change to the extent that we will be able to make adequate provision for the population on retirement.

Approximately 15 years ago, when I had responsibility of sorts, for pensions I proposed that a body similar to the National Treasury Management Agency should assume responsibility for managing pension funds on behalf of the State. Many people objected to my proposal at the time. If it had been adopted, we would have had a fall-back position in terms of resources when some of the recent events occurred.

As has been noted, we are reaching a point at which a universal charge for pension contributions will have to be applied as otherwise people will have to go through the process of means testing, which is not a cost-effective option. People would be horrified to learn of the overall cost of the various means tests. The simple approach is to require everyone to make a contribution and pay a pension which does not require a means test. I note some commentators have recently called for benefits to be means tested. We are in difficult times but if one introduces means tests for benefits, one creates a further cost to the State which would be outrageous. Every time an administrative intervention is made in the processing of claims, the process becomes less efficient and more costly and burdensome.

I indicated that people can and should work until a later age. This scenario is anticipated in legislation. Some people will find the option of working long after the normal retirement age beneficial, therapeutic and important. This option should be encouraged and people should not be penalised for availing of it. I am concerned, however, by some of the comments made from time to time on the benefits accruing to pensioners, notwithstanding that pensioners have paid contributions into the system, sometimes over a very long period. A previous speaker indicated that some people work for longer than others. It should be acknowledged that those who have made contributions over a long period did so on the understanding that they would receive a specific payment, commensurate with or related to the cost of living. Those of pension age and the generation that succeeds them require assurance in this regard. The current generation may not even consider the fact that they will rely on a pension in later years and it behoves it to concentrate on what lies ahead. The State must incorporate this aspect in its forward planning because the options available to us are not easy.

For the past three years, the House has regularly debated emerging financial issues which have had a critical impact on the well-being and quality of life of the population. Most of these developments have been negative and were brought about by various circumstances which I do not propose to discuss in detail. It is pointless proclaiming opposition to the steps that must be taken given that none of us likes doing what has to be done. No one welcomes a reduction in income but unfortunately we must all face that prospect. Deputies, Senators and all those we represent outside the House have been affected negatively by factors and circumstances which have not been always within their control. We must make clear to everyone that what we are doing is not by choice and it is being done on the basis of arrangements which have been entered into already. Anyone who suggests there is an easier or softer means of achieving the required outcome is deluding himself or herself as well as people outside the House.

Concerns about the future and present are linked because the decisions we make now, taken against the background of the developments that have taken place in recent years, are crucial. They must be well founded, costed and soundly based if we are to prevail. It is possible that other options are better but many are much worse and we must contend with the circumstances that present.

Since I entered the Dáil, which was not today or yesterday, we have, on more occasions than I care to remember, discussed State and private pensions, pensions funds and their management, use, viability and solvency. Sometimes I worry that we seem to prepare only for the immediate period ahead and are not aware of the various unforeseen scenarios that present from time to time.

One thing I cannot understand is that nobody was able to foresee the kind of collapse of confidence in the financial system and the rapidity with which this happened in the past four or five years, or as it is now possible to see, over the past 15 years.

I make this point in particular because the last comparable recession, or depression, depending on one's state of mind, was in the 1920s and 1930s. There were those who said these things could never happen again, that we were now much cleverer and smarter and would never make mistakes like those made then. What was forgotten, of course, was that modern technology made it much easier for people to make massive profits and, equally, massive losses in a shorter space of time than the blink of an eye. That is what happened in the meantime. There are advantages to modern technology which have benefited our society but there are serious issues in its regard too, which we must keep in mind for the future. The situation we now face, while bad, can become even worse. We must carefully consider and monitor issues as we proceed, especially in regard to investments and how they might affect our pension schemes, public or private, in the future, and we must make decisions that are in the interest of our economy and our people, with due regard for both.

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