Nicky McFadden (Fine Gael)

I move amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"recognising that:

according to most recent poverty figures almost one in five pensioners is at-risk-of poverty;

among EU member states Ireland has the second highest at-risk-of poverty rate for persons aged 65 years and over;

Ireland has the lowest pensions expenditure among EU member states;

the number of people over 65 will increase by 60 per cent over the next 14 years, and will more than triple by the year 2061; and

that progress has been slow in reaching the National Pensions Review target of ensuring that 70 per cent of the working population has private pension coverage;

calls on the Government to ensure that the consultation process, as set out in the Pensions Green Paper, will conclude by May 2008 and that a strategy is implemented as a priority to fill the existing pensions gulf."

I am pleased to meet the Minister for the first time and thank him for taking the time to come to the House. Senator Cannon noted that in the agreed programme for Government, the Government promised to increase the basic State pension by around 50% to at least €300 per week by 2012 while reducing the rate of PRSI from 4%to 2%.

A recent report proved that by 2010, PRSI contributions will not be enough to pay for welfare benefits. This means that the social insurance fund will move into huge deficits. The current surplus of €2 billion will be gone by 2010 and by 2016 we will have reached a deficit of €12 billion in today's money. According to recent poverty figures, almost one in five pensioners is at risk of poverty. The other day I met an 80 year old man who retired on a pension that was not index linked. His pension at the age of 80 is the same as it was 15 years ago. How can we talk about the pensions of the future while standing over the failure to index link the pensions of the elderly today? I know this is mentioned in the Green Paper.

We are putting away money to provide for the pensioners of the future when the pensioners of today are the people who gave us the Celtic Tiger. It is these people who are in poverty and it should also be noted that the majority of pensioners are dependent on social welfare. The number of people over 65 is expected to increase by 60% over the next 14 years. That people are living longer, healthy and full lives is to be welcomed. However, it means that the number of pensioners at risk of poverty will rise significantly.

It is estimated that the pensioner support ratio, which is the number of people of working age compared with the number of people over 65, will fall from six in 2006 to two in 2061. In addition, Ireland has the lowest State pension expenditure as a percentage of gross domestic product among EU members.

Given these facts, how does the Government realistically expect to provide pensions in the future? How does it expect to deliver on its promises to increase State pensions, a move we also want, and reduce PRSI? Fianna Fáil has been in Government for ten years and this Green Paper is its first attempt to provide adequate pension coverage. Senators O'Malley and Cannon commend the Government's publication of this Green Paper but it has taken ten years, which is a very long time. The Government promised this Green Paper seven months ago. I acknowledge the work of the former Senator, Sheila Terry, who worked on this issue for a significant period and put forward many constructive proposals in respect of this issue.

Pensions should be dealt with by one Department. It could be argued that there should be one Minister with complete responsibility for pensions, perhaps the Minister for Social and Family Affairs. As it stands, the regulatory body for life assurance companies and pension funds is in the hands of the Department of Enterprise, Trade and Employment. The Pensions Board regulates occupational pension schemes, while the Department of Finance controls the National Pensions Reserve Fund and the SSIA scheme. The latter scheme, to which Senator O'Malley referred, would, if slightly modified, make an excellent pension vehicle.

Only one third or 32% of pensioners have an occupational pension. Around one half of pensioners get 80% or more of their income from social welfare. Half of those currently working hard and paying taxes to the Government expect their main retirement income source to come from occupational or personal pensions. The other half of the working population is not part of any occupational or personal scheme. This means they expect the State to provide their full income after retirement.

A total of 27.5% of people under the age of 25 have a pension. It is crucial that the views of young people in their 20s and 30s are heard in this debate as they will be most affected by these policy changes. I consulted the National Youth Council of Ireland when researching for this debate and it was made very clear to me that young people recognise that there is a long-term need for a greater uptake of private pensions by young Irish workers. The Government should encourage young people to take out pensions as soon as they start work.

In light of this, it is essential the Government takes a role in changing people's views on pensions. It needs to take a lead role in encouraging people to plan ahead, find other sources of income after retirement and not depend solely on the State pension because this Government will not be able to provide it.

It is important the Government looks at the distribution of tax benefits for private pensions and considers ways to better target tax incentives at lower and middle income earners, drawing from experience with the successful SSIA initiative. I call on the Government to rise to this challenge. We must ensure the consultation process set out in the Green Paper is concluded by the deadline of mid-May 2008 and eventually leads to positive legislation

A pension is a property right which is protected under our Constitution. It is a breach of an individual's constitutional rights to force him or her into a pension which ultimately turns out to be more or less worthless. Some people continue to be forced into such schemes as a condition of their employment. Will the Pensions Board continue to stand over current circumstances in which a person does not have a choice to opt out of a pension, even where an employer seeks to make it a condition of an employee's contract?

The Green Paper on pensions represents a comprehensive examination of the challenges and options facing Ireland in ensuring all our people have adequate pension coverage, and I welcome it. Given that one half of the working population does not have any personal or occupational pension scheme and few have the security of a defined benefit scheme, it is vital that major steps are taken in the coming years to improve pensions. I ask the Minister to honour the promise to increase the basic State pension to €300, provide for it in the upcoming budget, remove the anomalies identified in the pension scheme in respect of farmers and ensure women are treated fairly in pension provision, especially those affected by the marriage bar, as Senator Cannon noted.