Joan Burton (Dublin West, Labour) | Oireachtas source

The issue of pension charges is, as Senator Sean D. Barrett suggests, extremely important. The amendment will give clarity to the procedures involved. It has been argued that 50% is not adequate and people have asked why, for example, the State cannot cover 90% or 100%. After a period of serious economic difficulty, we are finally getting back on our feet. Employment figures are moving in a positive direction, but we are not out of the woods by a long chalk and have a huge legacy of debts owed to international creditors, led by the troika. The question arises of how we would fund a significantly higher burden on the State than the EU directive proposes in the context of the pressure put on citizens of the State to meet the costs of the bank collapse and the troika obligations entered into in 2010.

When I came into office, I approached the issue of pension reform in a systematic way by bringing forward a number of changes, getting the sovereign bond off the ground via the NTMA in 2012 and commissioning reports on pension charges and the structure of pension governance and a report from the OECD on how we might develop a better structure. The report on pension charges which I commissioned shortly after I came into office was undertaken by the Department of Social Protection, the Central Bank and the Pensions Board, with support from PwC. After we published the report, we opened it to consultation by inviting the industry and other interested parties to respond. The level of response was rather low. Essentially, smaller schemes in Ireland pay more. It is a problem for a country such as Ireland, with a small population base and a relatively small number of employers, that we have a lot of smaller schemes. The cost can be significant. The deregulation introduced at the height of the boom in the late 1990s and early 2000s allowed individuals to manage their own pension schemes. In many cases, these were educated and successful business people. They were assisted in managing their schemes by significant tax breaks for self-employed persons. The report on pension charges showed that people in that situation could have paid up to one third of the total fund in charges. I created a number of structures to approach the complexity of pensions. I have committed to changing the governance structure for pensions and when the Bill has been enacted, I will establish a pensions council which will represent consumer interests.

As Senator Sean D. Barrett noted in respect of students, it is important to develop an understanding of this area. One of the reasons pensions policy has been the responsibility of the Department of Social Protection rather than the Financial Regulator is my Department can make the advocacy case on the importance of pensions to people who are in their 20s and 30s. This is a period of life when people often have more on their minds than providing for pensions. That is why I welcome the proposal in the OECD's report of having an additional pension provision to that of the State pension on either a mandatory or an auto-enrolment basis. It will be essential to develop such a system in the Irish case.

The amendment sets out exactly what is to happen. In this case, it will involve the general body of taxpayers, some of whom may not have pensions other than their general retirement pension based on their PRSI contributions. However, the Minister for Finance made provision in budget 2014 for an extra levy of 0.15% to meet obligations arising from this legislation. These would include obligations in respect of Waterford Glass.

The arrangements are to take the certified amounts from the Central Fund.