Shane Ross (Independent)

The Pensions Board is a failure because the members want to maintain that situation without change. The first thing the Minister should do is fire them, because they have vested interests. The board is fundamentally flawed and has failed. It has been inadequate and has failed on PRSAs and on radically tackling the pensions industry. A structure should be set up whereby politicians can no longer appoint political powers to a vital industry of this sort because, otherwise, board members will continue to take decisions which inevitably led to utter inertia. That is one the problems we face in the pensions industry. If the Pensions Board were replaced, we would have a much healthier industry.

One need only look at the number of consumers on boards of this type. It is characteristic of State agencies and of this nation that the number of consumers on semi-State bodies or State agencies of this sort is negligible. I am open to correction as I did not check this matter before arriving in the House, but I think there is only one consumer representative on the Pensions Board. Millions of consumers are affected by pension issues while only one of the 12 members of the Pensions Board is a consumer.

The Pensions Board is not run by pensioners, who have a pitiful input, but by the industry and by those who want to keep it going. It represents those who have their hands in the pie. Unless the Minister fires the board members, or sets up a new structure into which pensioners have an input, he will not solve the problem. He will have the same old problem, with the board members playing games.

I was shattered to read the Minister's speech and find out that the pensions review being carried out by the Pensions Board is not due until the end of 2006. What on earth is this going to be — the Encyclopaedia Brittanica? Why can the board not produce the review in five or six weeks? These people are supposed to know the business. They spend years identifying what is wrong with it. They have been making decisions on it — mostly wrong ones — yet when it comes to reviewing the industry, it seems it will take them over two years to do so. That is ludicrous.

The ESRI report is very welcome because it seems to ask most of the right questions. It makes some quite constructive suggestions, not all of which — in the nature of things — the Minister will take on board, although hopefully he will accept some of them.

The problem identified in the report which has attracted the most attention relates to people in the private sector who can put away large sums of money and obtain very substantial tax relief. Undoubtedly, this is the last of the great tax breaks, and we must decide if this is good or bad. The €1.5 billion cost to the Exchequer is phenomenal. I will leave that issue aside for the moment, although it is very unfair on the lower paid that the better off should benefit from this arrangement. All of us who can take advantage of it do so, as it is legal, but it discriminates in favour of the better off.

There is one particular wrong which the Minister might address, and on which he need not wait for the Pension Board to report. I refer to the position of proprietary directors. Every week at this time of year, we see annual reports arriving from big business — the worst offender being Cement-Roadstone Holdings — showing directors annually contributing sums of over €1 million of company money to their pension funds. There is no restriction on proprietary directors doing this quite legally. As the Minister knows, directors paid on the PAYE system must restrict such investment to approximately 30% of their incomes. Some proprietary directors have built up personal pension funds of more than €10 million. This is a gross social injustice. It is wrong that this can be done by very rich people to make them even richer in their retirement. However, it is widespread and everybody who can is doing it. It would be simple for the Minister to introduce a straightforward capping mechanism whereby nobody can put more than X amount per annum into their pension scheme. If there is one flagrant social injustice, it is this one.

The Pensions Board is doing nothing about this situation. It is just sitting on this extraordinarily lucrative industry and people are exploiting it fully. I refer not just to the people on middle incomes who are exploiting the 42% tax break but also to proprietors and the industry itself. I will name the industries who are doing so well out of this. Stockbrokers are making a mint out of other people's pensions by turning them over. Fund managers are making even more money out of other people's pensions by losing money and performing extraordinarily badly for them. There are fund managers who take hundreds of thousands of euro in income from the industry but who are losing pensioners' money. Lawyers, bankers, actuaries and all sorts of other bogus professionals are doing well out of it because a mystique has built up around this industry.