Joe O'Toole (Independent)

——who has completely supported the national pensions reserve fund. I called for it, supported it and negotiated for it; it is a great idea. It is the most far-sighted move I have ever seen any Government take. There are no votes in it and indeed there is opposition to it. Every time there is tightness of money, some party leader will call for us to put our finger in the till and take some money out. We made a great decision on that fund.

However, we should recognise that we took that decision when times were different. The idea germinated and developed when we had just come out of a period of net emigration and before we started experiencing net immigration. It is now considerably less important because thankfully if we allow all those immigrants to do the work they want to do, they will pay our pensions for us in the future.

Some 48% of workers have no pension contributions. Ten years ago those with private pension arrangements in pension funds, etc., only had one option, namely, to buy annuities. While many rip-offs exist in the financial sector, that was probably the greatest one. At its peak, it was possible to buy annuities of approximately 9%. Somebody who had, for example, saved £200,000 into a pension fund over a working career was guaranteed £18,000 per year. In present day terms that would look very good. In reality the £200,000 did not form part of a person's estate.

As people got wiser and as they began to cope with figures of more than a few thousand, they began to ask what would happen when they died and the money was gone. While a reduced annuity might be paid to a spouse, the money was lost. People rightly stopped paying into pension funds because they were being ripped off by financial institutions that paid money for a few years without any ownership of the money in an estate afterwards. People decided to do something else and many bought property.

Many of those without pension funds will point to having bought a house outright. Fair play to them if they have done so and if it looks after them. However, this does not carry the same level of security. The property market is cyclical and whereas everybody sees it one way at the moment, it is a bit like unemployment — people forget it when it no longer exists. While houses might be worth considerable amounts, their liquidity is not always very attractive. Those who invested in shoddily built apartments 15 years ago will have great difficulty selling them on the market because of the availability of higher specification modern apartments.

Whereas this may not be in his brief, the Minister should consider bringing greater flexibility to the retirement age. However, as we are discussing pensions he should bring these issues to Government or to the attention of the Department of Finance. We need a greater debate on the issue of defined benefits as opposed to defined contributions if only to give people an understanding. While it might not sit easily with the Minister's thinking, as Members, we are all in the luxurious position of having a defined benefit. Those with such a pension arrangement do not appreciate it. I spent 20 years trying to convince teachers that it was the most important element of their employment conditions. People may not be aware that I actually offered to pay more for it, rather than let anybody start messing around with it.

I do not know how many years it is since we introduced a European directive on portability of pensions but it is not working. Trying to transfer pensions from one place to another is a pain. People often say they will leave it where it is to preserve benefits down the line and set up a new system elsewhere so when they reach retirement age they must deal with three or four different sources of income. It is not that bad if they have it but there should be a neater way to approach it and legislation should facilitate that approach.

To get back to a year's pension entitlement for every year worked, we must be stricter on pension arrangements for establishment periods. People should also be able to move and make payments and there should be the same flexibility for defined benefits as there is for people who have made their own pension arrangements that they can carry with them.

It is now mandatory for employers to explain pension arrangements to new employees. I suggested to the Minister for Finance that this is a great idea but it makes no sense for an employer to explain pension provisions to an 18 year old part-time worker. Before 26 years of age, young people should have the opportunity to make the same savings as for pensions, with the same tax encouragement, except they would be placed in a specially designed deposit fund in a building society to be used for the deposit on a house. This would also give young people the savings habit. I have discussed this with the Revenue Commissioners and while there are certain problems they are not insurmountable. It would be a progressive and creative way to deal with this issue.