Willie O'Dea (Limerick City, Fianna Fail)

I apologise, as I have a frog in my throat. I come here today to bring something to the Minister's attention and, more importantly, to the attention of workers who have not yet been signed up to a company pension scheme. It has come to my attention that there are a number of brokers and pension providers who are approaching companies, particularly small ones, to advise them that they can avoid the auto-enrolment scheme by signing their workers up to a pension scheme now. I urge employers to reject those approaches. I would like the Minister to bring the matter to the attention of workers and their trade union representatives because anything these providers are offering now that will obviate the need to enrol workers into the auto-enrolment scheme will leave them infinitely worse off, in 99.9% of cases anyway.

Lower paid workers who are paying tax at the marginal rate of 20% will lose 5% on the tax side. Of course, it is the opposite case for people who are paying tax at the 40% rate, which represents about 30% of the people who will be auto-enrolled. What the people on the upper echelons will gain from that will be easily outweighed by two other fundamental differences between those private schemes and the auto-enrolment scheme as proposed by the Minister. First, the State scheme will be infinitely safer. There will be more flexibility. The scheme will be dealing with regulated funds and regulated companies and will be overseen by the Pensions Authority. Second, the question of the fees will be fundamentally different. The fees these private operators charge - usually about 1% per annum - will be infinitely greater than the fees the auto-enrolment organisation will charge those particular workers. Fees make a huge difference. It is estimated that some of the fees charged by these private providers in the past reduced the final value of the fund by 30% to 35%, which is enormous. I have seen numerous cases where people who contributed to their pension schemes all of their lives found the schemes were worth little or nothing at the end but the providers, who were taking commissions, got their commissions year in, year out as the funds depleted year in, year out. I say to workers that, if they are approached now in advance of 1 January to sign up to a pension scheme, beware those snake oil salesmen who, for short-term benefit for themselves, are trying to bring about a situation where workers will be much worse off in retirement than they would otherwise have been.

I wish the NTMA was operating this scheme. While I compliment the previous Minister, Heather Humphreys, and the present Minster, Dara Calleary, for bringing the scheme to its present level and finalising it after a 30-year delay-----

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