Séamus Brennan (Dublin South, Fianna Fail)

I thank Senators for a very good debate. There has been more than two hours and ten minutes discussion and I listened carefully to what was said. Almost every issue raised could be the subject of a debate in this House. We could have a debate for a whole day on issues such as child poverty, child benefit, pensions, child care and carers, so I will not try to get through all of them.

Senator Terry and others expressed concern about child poverty and the child benefit promise. Child benefit has increased substantially in the past couple of years. Since 1997, it has increased by €38 for the first and second child and €49 for the third and subsequent children, up to €141 and €177, which is a substantial investment. I want to put on the record of the House a commitment the Minister for Finance and I gave in the Lower House, namely, that the child benefit package, which was announced some years ago, will be completed next year. We will complete the package we laid out, which will fully meet the commitment given on child benefit.

The Senator also took me to task on the pensions issue. I will not give into the pensions industry at the expense of ordinary people. There has been much debate in the media about the borrowing provision. I have received a significant amount of correspondence on that matter. I said that what was prudent for schemes of over 100 people was equally prudent for smaller schemes. One could ask what is the difference between 101 and 95 members. However, one cannot look at the borrowing issue in isolation from the other investment rules which may impact indirectly on any facility to borrow. I am also of the view that complex issues arise in regard to prudential concerns and taxation issues. For that reason, I have established a working group comprising my Department, the Department of Finance, the Revenue Commissioners, the Pensions Board and IFSRA. We will move forward in that regard.

The Senator is correct that the Minister for Finance exempted small schemes last year. He said it is fine for one person to borrow to buy a property or make an investment because this is someone providing for their own pension purposes. Tax breaks are a different issue. It is a matter for the Minister for Finance in the context of tax breaks generally. It is a much bigger subject than just pensions. However, I acknowledge that tax breaks for pension purposes amount to more than €2.5 billion a year, which is substantial. We give more tax breaks for pensions than we pay out on contributory and non-contributory pensions. In any discussion on pensions, one must take the €2.5 billion on tax breaks for pensions and the €2 billion paid out on contributory and non-contributory pensions together.

The Minister for Finance exempted these schemes and the EU directive allowed me to continue that exemption. Between now and September, when the IORPs directive kicks in, I will examine how best to continue the exemption. Having examined it carefully, there does not appear to be an argument on prudential protection grounds to, on the one hand, encourage people to take out pensions and, on the other, to say that if one takes out a pension, one will be stopped from borrowing to protect one from oneself. These pension schemes mainly include one to four people; they do not include up to 100 people. They include a small number of people, the majority of whom may be single individuals. I can only do so much to protect them from themselves.

The query that arrived on my desk was whether I should stop them borrowing. If one is employed in a small business or whatever and wants to buy a property to be used as one's pension fund for the future, and if the former Minister for Finance said it is fine for them to borrow money to buy that property so that they will have a pension for the future, I cannot say to them that they cannot borrow because I must protect them from themselves, I do not trust their judgment on the borrowing issue or they will have to buy a cheaper property and have a smaller pension. I did not buy that argument. I bought the argument that it is better to encourage people to have pensions, and let them borrow for it, if they are the only pensioner. If there are hundreds or thousands of pensioners, borrowing should be out of the question.