Dáil debates

Thursday, 30 April 2009

Priority Questions

Pension Provisions.

3:00 pm

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Question 2: To ask the Minister for Social and Family Affairs the way she will proceed in terms of pensions policy in order to address the outstanding issues; and when she will bring her full proposals to Cabinet. [17305/09]

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
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Since the Green Paper on pensions was published in October 2007, the economic landscape has changed significantly in Ireland and the rest of the world. This has resulted in significant difficulties for pension scheme members, trustees and employers, related to the collapse in equity values and significant losses in pension funds.

Given these changed circumstances, the Government has moved to assist defined benefit schemes and their members through measures announced in December 2008 and more recent announcements. These include the establishment of a pensions insolvency payment fund, a reordering of wind-up priorities, provision for restructuring of pension benefits and stronger regulation with regard to remittance of pension contributions. These measures have been introduced to assist workers who are facing real and immediate difficulties with their defined benefit entitlements.

The Government is fully aware that the challenges facing our pension system go beyond these immediate difficulties. Members of defined contribution schemes have also faced losses in the value of their funds. In addition to these immediate pressures we are also faced with challenges relating to pensions coverage, the sustainability of our pensions system, the adequacy of current provision and the issues raised in the Green Paper in relation to social welfare pensions.

It is the intention of the Government to deal with all of these issues. It is important that the decisions we make are the correct ones, given that these decisions will have a significant impact on this generation and the next. Our objective must be a pension system which will deliver an adequate retirement income for all which is, at the same time, affordable and sustainable for the State and those who sponsor and provide occupational pension schemes. It is also important that an appropriate balance is struck between all stakeholders.

This Government has responded to the immediate pressures facing pension scheme members in a way we deem to be fair and equitable. We will continue to discuss further long-term reform options for inclusion in the final framework and I expect that this will be published in the near future.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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The reality is that we have been waiting years for this Government to address the pensions crisis facing the country. It is 19 months since the Green Paper was published and we are still awaiting a White Paper on the way forward. The minor changes the Minister made in December and this week amount to nothing more than robbing Peter to pay Paul. She is not doing anything fundamental in terms of addressing the major problem of the deficit in so many pension schemes.

When will the Minister set out where the country is going in relation to pensions? Pension schemes are losing money by the week. There is a major problem as regards the over-emphasis and over-concentration on tax relief as a way of dealing with pensions. I have already asked the Minister to kindly come up with figures in that regard, and I now ask her again. The only figure we have for tax relief on pensions and its cost relates to 2006, and that is a global figure. Will the Minister produce figures for us before she announces the Green Paper that will provide data showing the different elements of the current pension provision costs? I am particularly concerned about the cost to the Exchequer of the self-administered schemes. Will she, therefore, be in a position to provide that data prior to the publication of the White Paper?

How does she intend to proceed in regard to pensions, given that millions of public and private money has been lost in the past year, in particular through gambling on the stock markets? Does she intend to take a new approach to pension provision and, if so, will it have the State pension at its core?

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
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The measures taken in recent months were obviously to deal with the current difficulties that have arisen and were not designed for the long term. The framework document will deal with the long-term issues. Other countries that have introduced long-term frameworks have set out a timescale for their commencement. For example, the UK measure will not start before 2012. The measures we will take, depending on the type of decisions we make, will obviously require legislation and a starting point that will not be this year or next. Given that it will have implications that will affect all workers for the next generation, it is important to get it right. The Green Paper was published at the end of 2007, but following on that there were some 380 submissions, various conferences and a number of meetings. I met with the unions, the women's council, the Senior Citizens' Parliament and various other groups that made submissions. We will shortly publish that long-term framework document.

As regards the Deputy's question about self-administered schemes, the Revenue does not collect specific data in that regard. The tax reliefs available amount to approximately €2.9 billion, as we know, but it does not have the specific data in relation to that because it claims the resources required would be disproportionate to the value of the work of Revenue. However, when Revenue carried out an audit of the schemes a very high compliance level was found.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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This has nothing to do with tax compliance, but rather with the cost to the Exchequer. I put it to the Minister that unless she is in a position to provide information on what the different types of pension relief are costing the taxpayer, her framework document will have no credibility. She should kindly get the figures and let us know how much tax reliefs to certain categories of pension schemes are costing. Again, does she accept that on grounds of equity and value for money we must move away from the tax relief-based pension approach and put a basic decent State pension at the core of any future pension policy.

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
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The State pension is at the core of the Government's provision. The value of the State pension is €5.4 billion, and it is certainly at the core of what we do. The increases in the level of the State pension in recent years has certainly helped to support pensions. For the future, we must ensure individuals also take responsibility to supplement that and to ensure private personal provision is in place. We must also ensure the balance is right between the State, the individual and the employer.

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Does the Minister accept that is not the case at present?

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
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It is interesting in reading the submissions to find that the unions are all saying-----

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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I am just asking-----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Allow the Minister to reply, please.

Photo of Mary HanafinMary Hanafin (Minister, Department of Social and Family Affairs; Dún Laoghaire, Fianna Fail)
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People have different perspectives on this and because there was no consensus it was not easy to come up with an approach. Nonetheless, we are trying to determine what the balance should be for the future, how we can support people and have a more balanced approach in terms of tax reliefs, the benefit to the individual of the State pension, and so on, while at the same time ensuring more people make provision. I expect, genuinely, to be in a position over the next few weeks to publish the document.