Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)

My purpose in raising this matter is to argue the need to allow a certain cohort of people to unlock part of their pension funds. This would allow for a more humane and flexible system, reflecting the reality of life for many people who are under financial duress.

I draw the Minister of State's attention to three core areas. They are additional voluntary contributions, AVCs, private pension schemes and Section 19 of the Finance Act 2011. It is important that widespread early draw-down of defined benefit and defined contribution schemes be avoided. However, there are, currently significant funds in additional voluntary contributions and other personal pension schemes that are suitable for early draw-down. According to IBEC, it has been estimated that funds in additional voluntary schemes amount to roughly €4 billion. Many of the people who paid into such schemes were in a very privileged position during the boom and, wisely, chose to save some of their bonus payments and additional income. Now, many of these people have high personal debt and are struggling to meet financial commitments.

In January 2011, more than 40,000 borrowers were in arrears of three months or more, and another estimated 40,000 home owners were at risk of arrears. A report published in 2011 cites the significant effects on people's physical and mental health of stress, worry and inability to plan for, or control, their future. By allowing access to such funds the Government would provide an essential lifeline to many families.

I draw attention to the substantial wealth stock in personal pension schemes. IBEC estimates money in these funds to be in the region of €15 billion. Many of the people who contributed to them over the past decade were self-employed small business owners. Many are in negative equity or in serious financial trouble. These groups should be allowed a once-off draw-down of a limited amount from accrued funds to be accessed now and to remove the link to retirement.

I draw the Minister of State's attention to section 19 of the Finance Act.

It essentially forces individuals with an average pension fund of €200,000 to €250,000 either to purchase an annuity, contrary to the whole concept of ARFs, or lock the majority of the fund away until they reach the ripe old age of 75 years. Basically, it increased the guaranteed income requirement from one times the State old age pension to 1.5 times the pension, that is, €12,000 to €18,000 per annum and increased the amount of the pension to be locked away from €63,500 to €119,800. Therefore, on retirement with a fund of €200,000, 25% will be taken tax free. Of the €150,000 that remains, €120,000 will be locked away for a further ten years, with no access to the pensioner, who will somehow survive on a fund of €30,000.

I ask the Minister of State to consider the drawdown of the AVC contributions, a partial once-off drawdown of the private pension scheme and section 19 of the Finance Act.

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