Eoghan Murphy (Dublin South East, Fine Gael) | Oireachtas source

The legislation is very welcome and I congratulate the Minister on bringing these proposals forward and giving of her time to debate the Bill. I wish to begin with the OECD report into our pension system which was commissioned by the Government in 2012. One of the conclusions of that report was that there was unequal treatment of public and private sector workers due to the prevalence of defined benefit plans in the public sector and defined contribution plans in the private sector. While that finding was presented to the Government and this Parliament, we did not need that work to be done because many people already knew that was the case. I am not trying to bash public servants but it is important that those in the public sector in receipt of defined benefit pensions, as is the case with the vast majority, should recognise how incredibly fortunate they are to have the State sovereign backing their entitlements because as we know, not everyone is fortunate enough to have the protection of the State sovereign when it comes to their pension entitlements. The vast majority of those in the public sector do not need the provisions in the legislation. That is a good thing for them. It is good for those working in the public sector that the State backs their pensions in the way it does. They do not have to fear insolvency and should recognise the great advantages they enjoy. These advantages must also be borne in mind when we debate issues like pension reform, the length of the working week, reforming work practices or changing salaries.

It is incredibly important that we make comparisons with the private sector and they are not fair comparisons when we take this crucial issue of pension entitlements into account. If we want to achieve fairness in people’s working lives both in the public and private sector, we need to recognise this in the current pensions system and welcome the important reforms coming from the Minister to achieve this fairness.

A larger problem is how we pay for pensions. While the working age is going up incrementally, our working lives are getting shorter. People are starting to work later in their lives as they receive more education. Essentially, we have a shorter working life that is meant to financially sustain a lengthening non-working life. When one takes into account changing demographics in the next 30 to 40 years, despite the baby boom blips that occur from time to time, one wonders how we can sustain this development. It is like constructing an inverted pyramid - it is simply not going to stand. Total pension payments across the system are over €3 billion gross. We do not know what future liabilities will be in certain areas of the public sector, for example, in health, because they have never been calculated. In 2009 a figure for the State’s future liabilities was calculated at €116 billion. That figure is now out of date because of the economic changes and the reforms the Government has introduced in the pensions industry. The Comptroller and Auditor General is compiling a report on future pension liabilities, which is welcome. When the current economic crisis ends, the pensions crisis will still be facing us.

I find it odd when people give out about tax reliefs for private pension contributions. These reliefs are a short-term expense on the part of the State for a much greater saving in the longer term. It saves the State money by having individuals provide for their pensions privately. Why would we be against this when the result is greater resources for the State pension and general public purse, resources which could then go to those who need them most? We cannot ignore the fact that the highest payment from the public purse is for social protection payments, of which more than one third goes on pensions. That is a significant figure in comparison to other State expenditure figures. We have to ensure it is sustainable. That is the job that has fallen to this parliament and the Government, planning 20 to 40 years ahead. We should be pushing people into private pension schemes, encouraging them to provide for their own futures. We should not be telling them that they can and should always depend on the State such that if things do not go well or when it comes to that difficult point in their lives and they realise they cannot provide for themselves, the State will automatically help them. Of course, it should help those who need help, but we must get people to see what a good idea it is for them to provide for their own pensions privately through defined contribution schemes. While I supported the pension levy, it is a retrograde step and needs to be ended as soon as possible because it is counterproductive in encouraging people to make provision for their post-work lives.

The legislation is welcome, as we did need to restructure defined benefit pension scheme priority orders to ensure greater fairness when a scheme or the company responsible for it became insolvent. Single insolvency and double insolvency is occurring on a wide scale. Accordingly, we have a responsibility to ensure all of the appropriate measures and supports are in place. A balance needs to be achieved in this regard. On the one side, there is the pensioner, a person who has made contributions throughout his or her life and is now fully dependent on it and who needs to be protected for obvious reasons. On the other side, there is an employee who has made contributions and could even be close to retirement. Insolvency could wipe out his or her pension. This legislation will address this issue. Several Members raised pension practices in the United Kingdom which we are not following. I am looking forward to Committee Stage to see if we should incorporate these practices.

I welcome the legislation and this debate. However, we need a much bigger debate on the pensions crisis facing the country in the public and private sectors. This liability hangs over all of us. It cannot be kicked down the road as previous Governments did.

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