Joan Burton (Dublin West, Labour) | Oireachtas source

This is a tricky issue as it involves having to balance the relative certainty provided by an annuity product, which, while very expensive in the current market, will provide a fixed level of income, as opposed to taking the risk of the investment market. The standard advice is that as people get older, the value of certainty and lower risk increases. The median pension amount is approximately €11,000 per annum, which is not a high figure. The funds are, therefore, not large, and the conventional advice, which I suspect is correct, is to move closer to cash or its equivalent. One of the current difficulties, however, is that interest rates are extremely low. While low interest rates are good for the investing side of business, they are difficult for savers and pensioners. As the organisations which lobby on behalf of pensioners correctly remind us, pensioners are on fixed incomes. If the fixed income is interest-based and one is purchasing an interest-based product, it is difficult to obtain an appropriate return. The interest rates available from the European Central Bank and the Federal Reserve in the United States are close to zero. I wish the ECB would take greater cognisance of the fact that inflation is not an issue. The annuity approach may be safer, even if the returns can be unsatisfactory, as choosing the investment route for a small fund could have high risks attached.