Kathryn Reilly (Sinn Fein) | Oireachtas source

I welcome the Minister and I thank the Chair and other Senators for facilitating my contribution to the debate.

I welcome the Minister's initiative in commissioning the OECD report on our pensions system. When the report was released it received very little attention even though the issue it deals with is of huge importance not just for the Government but for society in general. Pensions policy not only affects people in receipt of pensions but every person. It has a huge bearing on our economy. This report is a valuable contribution to the ongoing debate about pension reform. One in ten pensioners live at risk of poverty and if the State pension was removed, 88% of pensioners would be living in poverty. Only half of the current workforce is covered by private and occupational pensions, and many of these schemes, particularly defined benefit schemes, are in deficit. Some of them are close to collapse.

The pensions protection system is almost non-existent, as we saw with the Waterford Crystal case. While there is no simple solution to the collapse of a pension fund, the decision that was made to resist confronting the obligations of the Government under EU law was disappointing. The regulation of the private pension industry is also a major problem. Not only are the charges opaque, as has been mentioned, but they are often very expensive. The high risk business of investing in private pension funds is in need of urgent regulation. Currently, much of the policy surrounding pensions is based on tax breaks to incentivise people to invest in private schemes, yet the 2009 ESRI report on pension tax reliefs shows that this is highly questionable. A total of 80% of the pension tax relief goes to the top 20% of earners, and everybody suggests that these savings would happen anyway.

The question is what we should do. Obviously, radical pension reform is required but that will not happen overnight or with the wave of a magic wand. It requires a great deal of calm, considered discussion and debate. We should explore ideas such as increasing the State pension to 40% of average industrial earnings and universalising it to ensure that no pensioner lives in poverty. We need a mandatory public pension system for all workers not in private schemes to ensure that people have a real chance to provide the additional savings required to give them some measure of comfort in their later years. We must also examine the pension tax relief system. There must be tighter regulation of private pension funds to limit the levels of risk involved.

I have two questions for the Minister. When will the structural options of the OECD be costed and when will that analysis be carried out? What timeframe does the Minister have in mind before she brings a response to the Government?