John Gerard Hanafin (Fianna Fail)

I welcome the Minister to the House. A debate on pensions is a perennial occurrence because we must all give thought to our pensions. History records pensions as deferred consumption or deferred pay. Even the Pharaohs of Egypt relied on Joseph to remind them that there would be seven good years followed by seven bad years. The Pharaoh took Joseph's advice and provided for the seven bad years.

In the same way a Government and a people must provide for pensions. The Government has committed to providing a pension of €300 per person per week by the end of its term. It is a great credit to the Government that it met its objectives in the last term. The House can have full confidence that it will meet its objectives in this term.

I would welcome provision for a mandatory pension modelled on the New Zealand system which is known as a Kiwi save pension. This seems to be a very sensible proposal. I suggest the opt-out clause would only be available once a person has been paying for ten years because the first ten years are the most productive over a 40-year contribution period. I refer to the Government's great work in providing for the future through the National Treasury Management Agency. The proceeds of the sale of Eircom amounted to €5 billion and has now grown to €16 billion, making all our futures more secure.

The provision of adequate pensions is a critical national issue for the future of the people. Pensions, whether provided through the social welfare system or through supplementary pensions, will have a significant impact on the quality of life of all. While I am impressed by some of the advertisements for pensions which seem to indicate there is a place in the Caribbean waiting for me, Senator Ross has pointed out that I need not become too optimistic because such pensions are all the same, for which I thank him. He has provided a dose of reality.

It is appropriate that pensions should now be an important issue on the national agenda. Decisions about pensions are long-term decisions with a long lead-in before they become fully effective. For companies which can afford it, a defined benefit pension is more beneficial as skilled workers will be attracted by such an option. However, the number of those in defined contribution pension schemes continues to increase. A total of 255,000 people were in such schemes at the end of 2006, with 95,000 PRSAs in existence. The issue of increasing longevity, lower investment returns and investment risk affects these savers just as much as members of defined benefit schemes. However, the effect of these issues will be borne solely by the individual and many will not become aware of the effect on their retirement savings until closer to their retirement. It could also go the other way, with a number of years of strong growth in the market which would see those with defined contributions doing well.

It is clear from the data provided by the national pensions review and other sources that the typical contribution to a defined contribution scheme, PRSA or retirement annuity contract will not be enough to maintain the contributor's standard of living in retirement. We must be aware of the significance of pension adequacy.

I thank the Minister for facilitating this debate on pensions. It is projected that by mid-century there will be approximately 1.7 million people over 65, compared with 500,000 today. From the point of view of funding pensions, it is projected that we will move from a ratio of six people of working age for every older person to a ratio of two to one by 2050 or 2060. This is a reminder that foreign workers are providing for the people of this country and this should be taken into account when assessing their contribution.

The Green Paper covers the background to the Irish pensions system and a broad range of issues relating to social welfare, occupational, personal and public service arrangements. It sets out a number of questions which require responses from the pensions industry, social partners, the public and all individual stakeholders. The demographic and sustainability challenges facing Ireland in the decades ahead are outlined and a number of scenarios and options are discussed. These include measures to address the sustainability challenge, maintaining the status quo, universal provision, increasing social welfare pensions, SSIA-type tax incentives and mandatory approaches. Other elements covered include annuities, the role of regulation and issues relating to work flexibility in older age.

It is not the purpose of the Green Paper to recommend any particular course of action but rather to set out the challenges our pension system faces in the future and to seek views on a number of suggested ways in which we might proceed. In that light, the Minster was correct to say it would be divisive to divide on this motion. The purpose of the Green Paper is to promote the debate, discuss various issues involved and make proposals, possibly even on a consensual basis. The Minister and the Government are determined to meet this challenge so that current and future generations will have in place a pension system that will deliver a secure and fulfilling retirement for all. The work of the past ten years, which included increasing the old age pension to more than €200 per week and making provision through the National Pensions Reserve Fund, is a credit to the Government parties concerned.