Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Deputy O'Dea has expressed concern about pensions and their sustainability. He has published a separate Private Member's Bill in regard to defined benefit schemes. The Minister for Social Protection, Deputy Varadkar, is conscious of the need for reforms in the area of defined benefit pensions schemes and in that regard he has published the general scheme of the Social Welfare and Pensions Bill 2017, as I mentioned in my opening remarks. That Bill aims to change the current position whereby the employer can trigger events that wind up a scheme and have no responsibility for bringing a scheme back to a stable position. The Social Welfare and Pensions Bill 2017 provides for improved engagement between employers, pension scheme trustees and scheme members as well as providing a 12 month lead-in time in situations where an employer intends to wind up a defined benefit scheme. This reform is very important in view of the unfortunate cases where employers ceased contributing to defined pension schemes with very little notice to scheme members. The Minister's proposed amendments would give time for engagement and negotiation between trustees, scheme members and employers as well as giving time for trustees and scheme members to plan the wind-up of the scheme and discuss and consider alternative pension provisions.

The Bill provides for more certain timelines than is currently the case. Specifically, it proposes to introduce a six-month timeline for the submission of funding proposals for schemes in deficit and obliges employers sponsoring defined benefit schemes, whether in deficit or not, to give 12 months' notice of their intention to cease contributions. The Social Welfare and Pensions Bill 2017 will provide an incentive to employers to engage with trustees and to ensure employees and the Pensions Authority are informed of the employer's intention with a significant lead-in time. This compares favourably with the current situation whereby employers can walk away from a scheme at any time. The proposed amendments improve protection for members of defined benefit schemes while strengthening the obligation and incentive for employers and trustees to reach agreement to eliminate any shortfalls in the scheme.

The Minister is also working to give practical effect to the commitment in A Programme for a Partnership Government to make our older years better years. He will be bringing forward a five-year action plan for Government approval which will provide a blueprint for sustainable and adequate incomes for people following their retirement. These measures demonstrate the Government's commitment to this area. I thank Deputy O'Dea for giving us the opportunity to debate the important issue of pensions.

There are now no levies on pension funds. The primary levy ended in 2014 and the smaller levy ended in 2015. The Government has no intention of reintroducing the levies. There is no issue arising from the programme for Government that would suggest that there is any prospect of a levy in the immediate future. Consequently, the very far-ranging imposition on the Constitution proposed by the Deputy is disproportionate, in my view, to the prospect of a levy, which no one intends imposing, arising in the future. While I thank the Deputy for the opportunity to debate the issue, I do not think he should proceed with this particular Bill.

The levy was introduced in desperate times. The option being pushed at us by the troika was to abolish the tax relief on pensions. We refused to do that. If one looks at the simple arithmetic of it, approximately one quarter of what was given to pension funds in terms of tax relief was taken back by the Exchequer over a very temporary period. There is no intention of doing that again. Very generous tax breaks are still allowed for those who save for pensions. This will remain the case and it is the intention of the Government to continue on that basis. The money collected at the time was put to very good use. The hospitality sector and the tourist industry were restored by the drop in the VAT rate from 13.5% to 9%. In the context of a wider economic framework, the restoration of economic growth and of so many sectors in the economy has underpinned pension funds in this country, has made such funds viable again and has increased the potential benefits to pensioners. Taking it in the round, the levy was a good temporary measure in an emergency but not to be advocated as a permanent part of the tax code.

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