Dáil debates

Wednesday, 25 June 2008

3:00 pm

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
Link to this: Individually | In context

Question 76: To ask the Minister for Social and Family Affairs the timeframe she envisages for taking and implementing decisions on pension reform. [24787/08]

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
Link to this: Individually | In context

Question 89: To ask the Minister for Social and Family Affairs when the Government will publish its proposals for reform of the pension system given that the consultation on the Green Paper on pensions has ended. [24617/08]

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 76 and 89 together.

The consultation period on the pensions Green Paper was completed and the time for making submissions closed on 31 May 2008. Overall, the response to the request for submissions on the Green Paper and attendance at the regional seminars held by the Department earlier in the year has been extremely positive. The consultation period closed with a very successful conference in Dublin Castle on international pension reforms. The conference featured presentations from countries such as Australia, New Zealand and the UK which have, or are planning, major reforms as well as speakers from the OECD and the World Bank who dealt with the wider international reform agenda.

The extent to which the public engaged in the process has been particularly satisfying and will give us a clear picture of the issues and concerns people have regarding pensions now and into the future. I understand that upwards of 360 submissions have been received, many in the final days of the consultation process, with approximately 300 coming from members of the public. All the submissions received are available on the website. The submissions are being assessed and a report summarising the issues raised and suggestions for reform will be finalised by approximately the end of June. This report will be published as soon as possible thereafter.

While I understand that there is a general acceptance in the submissions that action is required on our pensions system, it appears there is no clear consensus on the extent of the reform required, or the manner in which any reforms should be delivered. Our objective must be to ensure that we have in place a pensions system which will deliver an adequate retirement income to all our people and which can, at the same time, withstand the cost pressures which will arise in the future as the composition of our population changes and the balance between those at work and those who are retired shifts dramatically.

In deciding on reforms we must be aware that good pension provision entails significant costs for society as a whole, whether it is delivered through the State system or by personal contributions to private arrangements. While the Government is faced with difficult decisions, we are determined to bring this process to a conclusion by the end of the year by announcing a framework to address the pensions agenda for the longer term. The nature of the reform decided on will dictate the period over which it will be implemented.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

I have a concern over the timeframe involved. The Minister's predecessor gave a commitment that proposals would be ready to be brought to Government before the budget at the end of this year. The Minister seems to be moving away from that commitment and I ask her to clarify the position. Does the Minister accept we cannot continue with the very unfair tax-based reliefs system that very much favours the better off? We need to move away from that quickly and ensure a comprehensive pension policy to cover all people irrespective of incomes. When talking about establishing a framework for the future, would the Minister envisage proposals being brought to Government in time to be included in this year's budget?

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

As I said in my initial reply, it is intended to have the framework by the end of this year. Other countries, including the UK, gave a three or four-year lead-in period for the implementation of their strategy. Obviously that needs to be considered now because of the various elements involved. It will not be easy to come up with a framework because there are very divergent views in that regard. There is no consensus, particularly between the employers and the employees, as to how it should be addressed. It is accepted that there is a need to deal with the issue because of the demographic change. We are lucky in having the luxury of not being faced with this issue today because we have six workers for every person on a pension. In some years' time we will have only two workers for every person on a pension. The time is right for us to establish this framework. I cannot say what the outcome of the strategy or the implementation period will be because we have had so many submissions. However, it is the intention to bring the framework to Government by the end of this year.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

While I accept this is an extremely complex area, given that the Minister will have the report this week or next week she will have several months to consider it and make proposals. Is she saying we cannot expect any proposals to go before Government in time for the budget this year?

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

The strategy will have to be agreed between my Department and the Department of Finance and will then have to go before Government so all I can commit to is a framework going before the Government at the end of this year. As to whether any changes will be brought about in the budget, it is unlikely because that would have to be prepared by November. We are talking about a long-term view, so it does not need to be rushed for December of this year.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

The Minister's predecessor gave a commitment that the proposals would be contained in the budget this year.

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

Everybody would accept we are in a changing economic situation.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
Link to this: Individually | In context

That makes it all the more urgent that we introduce a fairer system.

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

We are not necessarily talking about the pensions of today but the Pensions Board is advising people through its awareness campaigns to ensure they make provision for their pensions, and this is working successfully. We have seen an increase in the last number of years in the number of people making some extra private provision. It is not as high as we would like it to be. Obviously we wanted to hit approximately 70%, but it is increasing. All that work is going on at the same time. We must take on board the range of views that has come across in the submissions and some of the international experience, which is very different. We have the benefit of being able to see what has happened in places such as Australia and New Zealand. Given all that and the level of interest there has been, it will take a few months to tie it all together. All I can commit to is that it is still the intention to bring it to Government by the end of the year.

Photo of Arthur MorganArthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

I agree with the Minister on the diversity of views on this matter. Virtually everybody I talk to has a different view. That is evidenced by the 360 submissions the Minister has received. The submissions are being assessed and the Minister hopes to have that report by the end of June. Will the Minister publish that report immediately or make it available to Members of this House? The Minister is not giving a clear indication on when she will have an assessment done on it and when she will make a recommendation. Can she give us any estimate on the timeframe?

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

All the submissions are on the web and are available to all members of the public. I intend to publish the report I am expecting over the next couple of weeks so that people can see the diverse range of views out there. Listening to other countries and reading the submissions, there are those who would like an SSIA approach, a mandatory approach or a soft mandatory approach. We have the diverging views I have already mentioned between employers and employees. What is the role of the State? What are people's expectations of their pensions? How much do people feel a private pension should be as against a State pension? What standard of living do people expect from their pensions as distinct from their working lives? All these issues must be considered seriously over the next couple of months and that is my intention.

Photo of Olwyn EnrightOlwyn Enright (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

While I appreciate that getting this right is the priority, time is of the essence. The Minister spoke about the work going on, the advertising campaign and the work of the Pensions Board. However, all that work is being stunted because of the uncertainty. People who have not taken out pensions would consider themselves to be badly advised if they took one out immediately because they do not know what changes will be made when the Government makes decisions on this issue. From that perspective, time is of the essence. If the Minister does not envisage this happening in this year's budget, does she have any idea whether there would be a Supplementary Estimate or a mini budget in the following year to do this rather than waiting a year and a half from now, which will happen if we take no action in the coming budget?

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

I do not accept that there is any uncertainty out there on people taking out provision for themselves.

Photo of Olwyn EnrightOlwyn Enright (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

There is, because they do not know what the Minister will do.

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

There is no uncertainty. People know this is a long-term view and are being advised on their personal circumstances. It is interesting to examine the pensions coverage when one sees that of people between the ages of 20 and 24 years of age, only 27% have made provisions. Our campaigns have particularly targeted them to ensure they take out pensions. They are not sitting by waiting to see what the Government does at the end of the year, next year or the year after. Any framework would have to be given time to get embedded.

Photo of Olwyn EnrightOlwyn Enright (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

The average age is 39.

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

It will have implications for social welfare, tax, employers and employees. I suspect it will need a lead-in time.

Photo of Olwyn EnrightOlwyn Enright (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

That is why people want to know what will happen.

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

They will have to wait until we produce the framework.

Photo of Olwyn EnrightOlwyn Enright (Laois-Offaly, Fine Gael)
Link to this: Individually | In context

That is the problem; they have to wait, which is why people are not taking out pensions.