Joan Burton (Dublin West, Labour) | Oireachtas source

As stated, since I became Minister the National Treasury Management Agency, NTMA, has created a sovereign annuity on the basis of which a number of insurance companies have developed products. It is quite interesting that the NTMA has indicated a continuous demand, with a financial value amount to €1.377 billion, for the amortising bonds used to underwrite sovereign annuities. The data from the industry indicate that the figure for total bulk sales for sovereign and conventional annuities to the end of quarter three of 2013 is three times that achieved in the 12 months of 2012. As the Senator is aware, if one transfers one's pension entitlements to an annuity, one will, as it were, be out of the fund and, generally, receiving a fixed income for the remainder of one's life. Obviously, how much one benefits depends on how long one lives. The difficulty for us is that the annuities were based on German sovereign bond rates which, in the context of the economic crash, became stratospheric in terms of cost. Essentially, people were paying to hold German bonds but were receiving hardly any interest in return.

When the NTMA issued its product, the rates were much more attractive, hence the level of take-up. In the current year sovereign annuity sales account for 75% of all annuity sales for defined benefit schemes. In monetary value, some €400 million of the €540 million in bulk annuity sales to the end of quarter three of this year was accounted for by sovereign annuities. These annuities were initially launched in 2012 and the trustees have tended towards the purchase of hybrid or basket products. Such products involved a mix of a conventional annuity for a portion of the pension and a sovereign annuity above a certain amount. However, it is generally full sovereign annuities which are being purchased. Information from the three providers currently in the market - Irish Life, Zurich Life and New Ireland - indicates that some 1,500 pensioners have received sovereign annuities to date. When the comparable cost of traditional annuities is taken into consideration, it is estimated that schemes have saved €70 million. Again, all of this is in the context of the financial crisis, what has happened to sovereign bonds and the comparison between the cost of Ireland's sovereign bonds and those of Germany. The German bond price tends to be the one which people take as the benchmark.

I will certainly obtain further information on the position with regard to EMI and return to the matter at a later date, perhaps even briefly on Report Stage. Senators Maurice Cummins and Marie Moloney asked a number of important questions about Waterford Glass. Again, I propose to come back to the House with information on exactly where matters stand in that regard at a later date. On balance and for the reasons set out, we are not providing for an employer obligation.