Richard Bruton (Dublin North Central, Fine Gael)
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Question 77: To ask the Tánaiste and Minister for Finance his views on whether the current rules governing the tax relief for pension contributions are equitable in their impact; and if he will make a statement on the matter. [17745/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Tax relief is provided at an individual's marginal income tax rate on amounts contributed to pension schemes, subject to limits. Relief is also provided on contributions made by employers to such schemes and on the amount of profits and gains generated by the investments held by the pension schemes. Pension benefits payable on retirement are taxable subject to an entitlement to take a tax-free lump-sum cash benefit.

Over half of all people in employment are covered by voluntary private pensions and the tax relief arrangements described have assisted in this regard. For people in employment aged between 30 and 65 years, the pension coverage level in the fourth quarter of 2005, according to the Central Statistics Office's quarterly national household survey, was approximately 62%. This compares to a target of 70%, to be met sometime after 2013, suggested by the national pension policy initiative.

The 2006 budget and Finance Act took steps to address some important equity issues and to limit the cost to the Exchequer of tax relief provided to higher income earners. Among several commitments in the new programme for Government to improve pensions, there is a commitment to develop proposals, in the context of the Green Paper on pensions and in consultation with the social partners, to provide an SSIA-type scheme in an effort to make supplementary pension provision more attractive to those on low incomes. This would further address pension adequacy and equity concerns and be negotiated under the aegis of the social partnership agreement.

Richard Bruton (Dublin North Central, Fine Gael)
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Is the Minister aware that each year some well-placed individuals can receive a subsidy of €50,000 into their pensions from the taxpayer while under half of people in employment get nothing from the scheme? Does this tally with the Minister's idea of fairness in a tax relief scheme? It certainly does not tally with mine.

During the course of the general election, proposals were made for a one-for-one pension scheme for those on low incomes. Has financial provision been made in the programme for Government for the introduction of such a scheme? During the course of the election, the Minister quickly withdrew that proposal when it was floated by the then Minister for Social and Family Affairs, Deputy Brennan. If this scheme is to come from a Green Paper process, will it have to wait in a queue after all other tax code commitments have been met? Will it be pushed to the end of the new programme for Government and only supported if there are enough resources left?

Brian Cowen (Laois-Offaly, Fianna Fail)
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During the general election, we stated we would give consideration to the introduction of an SSIA-type scheme that would have to be negotiated with the social partners. In the absence of those negotiations, therefore, it is meaningless to outline the prospective costs of it.

Richard Bruton (Dublin North Central, Fine Gael)
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The then Minister for Social and Family Affairs outlined it.

Brian Cowen (Laois-Offaly, Fianna Fail)
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During the election, as Minister for Finance, I clarified, without any equivocation, the issue. It would be considered in the context of the cost of pensions in the tax system as pension relief schemes work. There is considerable room for manoeuvre to see what changes can be made to pension arrangements that could accommodate, on a revenue-neutral basis, an SSIA-type scheme in the context of the full panoply of incentives available. Taking into account the limited resources of low and middle income earners, there is a need to provide some other means of attracting them to supplementary pension provision beyond the tax incentive schemes available at the marginal rate.

Richard Bruton (Dublin North Central, Fine Gael)
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Will the Government only introduce an SSIA-type scheme, which might offer some equity in pensions to people on low incomes, if savings can be found elsewhere? Will this scheme be put to the back of the queue and only funded if savings are found in other Government programmes?

Brian Cowen (Laois-Offaly, Fianna Fail)
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It is not a question of being put to the back of any queue. As proposed in the Green Paper, it is a question of examining the cost of pension provision and how the provision of further improved incentives would be taken up by people who do not regard current arrangements as sufficient for supplementary pension provision. That is what I am talking about and ideally from the State's and the Minister's viewpoint, to do so on a revenue-neutral basis in the context of the significant billions already being spent in this area, should be the way forward. However, this is subject to negotiation and discussion.