Willie O'Dea (Limerick East, Fianna Fail)

In principle, there is much merit in the Senator's amendment. Many annuities have fallen in value or are not as valuable when they come to be paid as was originally anticipated. This is because the yield from Government bonds has dropped considerably and there has also been considerable turmoil in the international equity markets.

The other difficulty with annuities is that, generally speaking, the benefit dies with the annuitant. Some people live long lives and other not as long as anticipated and I suppose the numbers balance each other out. Self-employed persons, provided they can prove they have an income of €12,800, are entitled to convert their pension contributions into cash, but that option is not open to employees in the PAYE system. There seems to be an inherent unfairness in that regard.

However, I hasten to add that all the criticism of annuities is not correct. There are different types of annuities and people can make different arrangements by incurring extra costs or paying extra contributions. This issue is under discussion in the context of the debate on pensions. The Government's view is that to extend the same facilities to employees under the PAYE system as the self-employed enjoy, which on the surface might appear fair, would be to put the cart before the horse given that it has begun to examine the question of pensions, including private pensions. Any tax changes or amendments to the existing tax structure relating to pensions will fit in with the general scheme on pensions that will be decided on foot of the current deliberations. It is somewhat premature to make such a change now, but I take the Senator's point. I do not want to anticipate the outcome of how this will evolve.

I do not envisage that the current system, which provides that the self-employed have the choice of converting their contributions into cash but those in the PAYE system do not, will survive. However, it is somewhat premature to introduce such a change in this year's Finance Bill.