Alan Farrell (Dublin Fingal, Fine Gael) | Oireachtas source

I welcome the opportunity to contribute to the debate on this Bill which, as has been repeatedly mentioned, will provide better protection for consumers and existing consumers of financial service providers that have left the market. As the Minister outlined, it will ensure that consumers in the latter group will continue to have access to services provided by the office of the Financial Services and Pensions Ombudsman. This is a just and appropriate response, because the effects of the uncertainty consumers face in such circumstances can impact their health and well-being. Financial stress and worry can diminish a person’s quality of life on a day-to-day basis, as we all know in this House, having gone through the last decade in particular. I am pleased that the Government is taking action to limit these circumstances by means of Bills such as this. There are, however, many other matters that I will raise towards the end of my contribution on which I believe we are very slow to act. We should take steps to resolve those.

Access to consumer protections and support through the Financial Services and Pensions Ombudsman can be pivotal in bringing resolutions to complaints and provides much-needed clarity for individuals.

I would also like to underscore that if such people do require assistance from the ombudsman, there is no charge in relation to filing a complaint, which is unfortunately something that needs to be mentioned.

On the wider issue of pensions, we must address some key areas that will benefit the population in years to come, making it easier for people to retire in the knowledge that their money is safe and has been set aside. The introduction of pension auto-enrolment, which I understand should be in place later this year, will be a game changer with regard to how we approach retirement in Ireland. The implementation of this scheme will, in years to come, be seen as a hugely significant step taken by this Government. Indeed, it is the largest change to the pensions system in the history of our State.

Research carried out last year showed that 46% of people do not feel that they understand pensions and 39% were unaware of the tax advantages of having a pension. Moreover, 74% put day-to-day spending ahead of saving and of pension holders, 62% felt they were not saving enough. These figures underscore the importance of policies such as pension auto-enrolment, but they also speak to a wider issue of what could be termed as pension illiteracy. If people do not understand a system or an incentive, it naturally follows that they will not engage with it, even when in their own interest. We see this in many aspects of life and the same is true with regard to pensions.

The introduction of auto-enrolment provides a golden opportunity to provide better information leading to a better understanding of, and better engagement with, pension services. Given good information, people will make good decisions. These changes will benefit individuals and the whole of society. Just as we must provide individuals with good information and guidance, we must also provide support for businesses regarding the implementation of auto-enrolment and allay their concerns over the cost of implementation. Those concerns have been raised many times in this House and I know that the Minister for Social Protection, Deputy Humphreys, is working to address them. In particular, I commend the decision to establish a central processing authority which will carry the majority of the administrative burden of the system, thus alleviating pressure on businesses to undertake this step on their own. Of course, in and of itself, that provides an additional layer of consumer protection.

In the years to come this will play an ever more important role in our society. We are seeing a shift in our population demographics, with people having fewer children and living longer, resulting in an aging population. We are also more mobile as a species and this is a good reason to provide more protection for pensioners as they move around and indeed, as financial companies move around. As these population shifts continue, there will be more pressure to meet budgetary demands for pensions and this underscores the importance of auto-enrolment. It will enable us to avoid the pitfalls that the future could hold if it were not implemented.

It is imperative that as people retire, they can do so safe in the knowledge that there will be money there for them when they decide to take that step and that the necessary protections are in place to ensure they are treated fairly. It is important, where disputes arise or financial service providers enter or exit the Irish market, that we have the framework to provide adequate consumer protection measures which, when called upon, aid individuals in a timely and efficient manner. This Bill, at its core, is about consumer protection under a specific set of circumstances. As I alluded to earlier, however, there are other sets of circumstances where consumers are bring ripped off, frankly. I refer to simple things like the fact that under most pension schemes, if a pensioner dies, the person who inherits his or her estate does not necessarily get 100% of the pension. Of course, if it is a State-backed scheme, that is a slightly different matter, but I am talking about people's own money. Why is it that a private pension company gets to trouser money belonging to somebody else? As I said, unless an individual is actually specified, if he or she is not in receipt of an award, he or she will not necessarily get the full amount but might only a percentage of that amount. Likewise, when individuals who make significant contributions to pension schemes over long periods of time do not survive to see the entire benefit of that pension, often those inheriting may or may not receive the entirety of what is left. I understand that there are costs involved but we all know that the banks and financial institutions are making millions upon millions of euro with our money.

A great case in point relates to mortgages which are, when one assesses them, laughable as a financial product, primarily because the consumer is the very last person on the list to benefit. The mortgage holder is contributing so much, often hundreds of thousands of euro for a mortgage of hundreds of thousands over the course of a lifetime, plus interest and associated fees. Again, this is not really a system that was established with the consumer in mind. It was established with the banks in mind and hundreds of years, sadly, of financial rules and laws from multiple first world countries have seen that system perpetuated.

My final point on pensions is something that really troubles me and has done so for many years. I refer to taxation. Why are pensioners being double taxed? Why is it still permitted in 2024 for pensioners to be double taxed? They are taxed on the income that goes towards their pension and then they are taxed on the way out again, with all of the aforementioned pitfalls in terms of them passing on the pension pot that might still be there, which is their money. It is not the pension company's money; it is the pensioner's money. The pension company will get its profit, rest assured. Those are my final remarks on the matter. I appreciate these matters relate to an entirely separate Bill but in terms of policy, I would like to see them addressed.

See this speech in context