Fidelma Healy Eames (Fine Gael)

I also welcome the Minister of State and hope she has a good response for me.

The matter I am raising relates to a proposal mooted by the Minister for Social Protection sometime ago to means-test the State contributory pension. Does he propose to deprive people of something for which they have already paid, in some cases for more than 40 years or more in others, and which, in itself, is subject to levies?

I will outline the reasons many people who have contributed to a State pension scheme believe this proposal is patently unfair and perhaps would be open to legal action. Apart from the consequent hardship, there is a potential grave injustice for a number of reasons, the first of which is that the State contributory pension is not a gratuity. It has been paid for over a period ranging up to 50 years. On the other hand, senior civil servants and public representatives such as ourselves can receive substantial indexed-linked pensions towards the cost of which we pay nothing.

The second reason is a qualified adult allowance is payable to spouses. For example, a wife with no income or entitlement is already means-tested. It would be truly shocking if a wife who has devoted, say, 40 years to her family in the home was now to be deprived of the only income she receives in her own right.

The third reason is that most privately funded occupational pension schemes have been integrated with the PRSI system, with the employer paying 10.75% in PRSI on a full salary, in addition to the employee's contribution. The removal of the State contributory pension from some employees would have serious financial consequences for already hard pressed employers.

The fourth reason is that many people are fearful about the future in terms of their occupational pension, given the state of the stock market. It is common to hear pensioners say they will at least always have the State pension.

The excuse used for considering means testing the contributory State pension is to protect the vulnerable. There are few people more vulnerable than people aged in their 70s who depend on a private occupational pension. Many of the individuals in question must support unemployed adult children. As the Minister of State is aware, private occupational pensions are subject to the vagaries of the market.

The contributory State pension is already subject to full PAYE tax assessment. In addition, pensioners already pay levies - PAYE and the health contribution - on occupational pensions. At least this approach is fair as it applies to everyone above a certain minimum income.

The essence of means testing is that anyone having a private pension income in excess of a specified threshold will not receive any additional income from the State. In other words, if the Minister for Social Protection introduces means testing of private pensions, many pensioners will lose the contributory State pension, despite the pension having been paid for. Depriving some people of something which has been paid for is unfair and of doubtful legality.

There is an even greater potential for unfairness when one makes other comparisons. For example, will a senior civil servant on an index linked pension of €142,000 per annum and a tax free lump sum of €630,000, for which he or she has not paid, have his or her pension reduced to a specified amount per annum? The Minister of State will be aware of the types of people I have in mind, including the likes of Rody Molloy and the former Financial Regulator, Mr. Neary.