Richard Bruton (Dublin Bay North, Fine Gael) | Oireachtas source

There is a great need. I have not seen the most up-to-date figures but from recollection I believe that about 40% of people in the workforce do not have any pension cover. That applies to both men and women although it is probably more acute with women, so there is a huge gap. The legislation begins to address some of the anomalies concerning how we treat pensions provision. We have a very strong pension in the public service and many parts of the private sector do not have anything like it. There is no doubt that even the tax-based supports are very skewed towards people who are professionally well advised and in a good position to put aside money rather than those who are not. You can get a relief of 40% if you are on higher pay but a relief of only 20% if on lower pay. Therefore, there are many anomalies in the way we currently address pensions provision. This legislation will begin to address those.

It is important to recognise that the legislation will begin to address income inadequacy in retirement but it will be a long time before we see it doing so significantly. People will need to be reassured that the State has a long-term commitment to the development of the contributory old age pension and that there is no way in which the trajectory, which I believe is towards a certain percentage of income, will be impacted by the setting aside of a top-up. If something like one third of income is to be supported by the contributory pension, reassurance is required that it will not be in any way diluted by our opting for auto-enrolment. I was not here for the Minister's speech yesterday, unfortunately, but I believe this is an important principle that people should be reassured about.

The contribution by the taxpayer may cause raised eyebrows. The employee puts in 1.5% and the employer puts in 1.5%, but only 0.5% is put in by the Exchequer. The income tax relief can be up to 40%, and I presume the corporation tax percentage is up to 12.5%. It seems that what would look like a 52.5% tax relief top-up, were it just going into a tax scheme, would be diluted down to one third. Maybe I am misreading it in that there will be some other tax allowance. If the contribution is the sole contribution by the State and there is no tax break on the money going in, the amount seems slightly low given that both the employee and employer make a contribution to the fund.

The question of whether it makes sense to have the pension fund split into individual pension accounts with their own risk management profiles and investment strategies has been raised. I am quite persuaded by the argument that, for a fund like that proposed, which is to be managed centrally by the auto-enrolment board, there is a strong case for a policy to maximise the return to the fund in which people would own units. The units would be based on their contributions. People do not need to have a personal account that goes into lower risk as they approach retirement. They simply should be realising their units. Those units will have a fairly stable value within an overall portfolio managed by the fund. The fund should do the anticipation, and if it needs to put a floor under those elements that are going to mature at an early date, it should be done at general fund level. There should be an approach whereby we seek to maximise the return on the investment and take advantage of the economies of scale that a large central fund manager would result in. One would not see a private pension fund breaking up the management of its fund into individual pieces for each worker; it would not see that as sensible. It would manage the fund and provide an annual return to everyone based on its performance, not the performance of everyone's individual piece of it. It would not ask people to make decisions on whether they wanted a low-, medium- or high-risk strategy; they would be using an overall strategy. That would reduce management fees and reporting costs and improve overall performance. I remain to be persuaded on why we are opting for a very unusual approach in which people would have an individual classified fund as opposed to owning units in a larger fund.

The requirement to retire at 66 is completely out of kilter with a proper approach to retirement in a world in which we are living longer. I am disappointed that the legislation continues to refer to retirement at 66. Our enterprise committee recently produced a report indicating that 60% of women would be happy to work beyond retirement age and that 40% of men would be happy to do so. If we are to live 20, 25 or more years after the conventional retirement age, we should be able to live life as we choose and not be subjected to compulsory withdrawal from the workforce or from the opportunity to contribute to the fund. It is a little perverse, if the Minister is encouraging people to continue to work under the PRSI scheme, to leave intact the compulsory retirement dates. The argument will be put that employers do not want to have individual conversations with their employees to ask whether they are still fit to do their jobs. Thankfully, no one has knocked on my door to ask whether I am still fit to do the job I am doing. If we are to have the huge opportunity I have alluded to, it is very ageist to envisage a compulsory age at which you should stop learning and working, at which time you should associate only with people of your own ilk. We are building it into our thinking about post-retirement provision. The reality is that, even with the scheme, many people will still be short on their pension provision, and many of them would like to continue to make contributions so they can work longer and, perhaps, have a more comfortable retirement after they decide at a later date to wind down.

I will probably bore the House with the next issue I wish to raise because I raised it already in respect of a different subject. We need to take a hard look at our approach to ageing.

I have been doing work around this. We are seriously failing to take advantage of the fact that most people's lives are 20 or 25 years longer than would have been expected a generation or more ago. We have a pandemic of isolation in the country among people who have dropped out of the workforce and find themselves isolated. It trebled during Covid and remains at elevated levels. Two thirds of people report isolation at some stage. Some 10% of people over 65 report painful isolation. We need to think creatively about how that can be addressed.

I think ageism is rampant in the way we talk about issues. We talk about pension timebombs instead of talking about the opportunities for people to continue to contribute. We talk about dependency ratios as if people at 65 or older are all the same and are a burden on those who are still at work. This is damaging. Not only is it damaging in narrowing the policy options that we consider, but it is actually contributing to the health costs that we might have to plan for. Isolation, loneliness and loss of connection are the greatest contributors to the loss of functional capacity, which in turn contributes to the high cost of healthcare for people who have lost those capacities.

This is great but it is really just scratching at the surface of the new thinking is needed about how we deal with the fact that we are all living longer. It is the greatest achievement of humanity to have this longer life. I was disappointed to see that the commission, which should have been a commission about taking advantage of longer life, is a commission on caring for older people. It is pretending that the issue of longer life is about care, decline and loss of capacity. It is not. It is an opportunity to do things that we were not able to do before. We can contribute to society in all sorts of different ways. When you think of the effort that we all collectively put into planning for the first 25 years of life - I am delighted to see that a childcare development agency will be put in place and that we are now looking at much earlier intervention to support the early years - you realise that we have not put anything like the same thought into how we make the last 25 years as productive and fruitful as possible.

I am doing a bit of work on this with the Fine Gael policy lab. I will be approaching Ministers in the Government and knocking on their door to ask them to think more boldly. One thing I noted in the speech that the former Taoiseach made when he stepped down last week was his assertion that we need to be bolder. We are living in a much larger economy than even 12 years ago. It has much larger needs and a vibrant population of people who, according to today's legislation, should be retired and not working. We need to be bolder and more ambitious in how we take advantage of the opportunities that provides. Public policy needs to take its head out of the sand and look at what the opportunities are here.

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