Fidelma Healy Eames (Fine Gael) | Oireachtas source

I welcome the Minister of State and thank Senators Katherine Zappone and Feargal Quinn for tabling this significant recommendation. The OECD has found that in Ireland only 41.3% of workers, four out of ten, aged between 20 and 69 years are enrolled in a fund pension plan. We know that the issue of pensions is a time bomb and, as Senator Feargal Quinn said, by 2050 there will only be two workers for every pensioner; therefore, we must plan ahead. When I was on the other side of the House with the Tánaiste and Minister for Social Protection, Deputy Joan Burton, this was fixed somewhat by increasing the eligibility age for the old age pension to 68 years. This was an improvement, but the issue is still a time bomb, as is widely accepted.

PRSAs were introduced in 2002, at which stage I was an employer - I had six employees and was obliged to offer PRSAs, but it was up to employees to decide whether they should take up a PRSA. However, employers complied with their obligations. As Senator Katherine Zappone said, the great thing about PRSAs is they are personal and portable in that they allow people to make decisions independent of their employers and regardless of whether they are in the public service. Public servants have access to pensions. PRSAs allow people to plan for their futures and retirements and we need people to do this. People are living longer and the least we should do is ensure this measure which incentivises personal pensions is on an equal tax footing with other pensions.

I was gobsmacked to learn that this provision will not achieve equality in this area as employees will be forced to pay USC on the value of employers' contributions to PRSAs. An employer may be generous and put aside more than is necessary for an employee, but this will see the employee being penalised by paying more in USC and he or she will end up with less money in his or her pocket. As of budget 2011, this measure is a deterrent to taking up pension schemes and militates against the nation's needs. It prevents people from planning for the future and turns them off from making such provision as they prefer to wait until later when things get better.

I sold pension products in a former life and one of the most attractive things about them is the contribution is subject to 100% tax relief. There was never a deterrent to taking up a pension scheme, but, despite this, people consistently procrastinated when it came to such matters. The older one gets, the more one must invest in a pension to get a return and this provision is a deterrent.

I ask the Minister of State to accept this recommendation today, but if he cannot do so, the matter should be fixed by Report Stage. I again thank the proposer and seconder of this wise and sensible recommendation.