Simon Harris (Wicklow, Fine Gael) | Oireachtas source

The discussion we had on this on Committee Stage was highly technical, but it was important to put that detail on the record of the House. Senators’ concerns about this aspect of private pension provision will be brought to the Minister’s attention directly.

In yesterday's debate, I explained the background and rationale for the differential treatment of employer contributions to PRSAs and to occupational pension schemes when it comes to USC. I agree with Senator Darragh O’Brien that there is not much to be achieved by going back over it today. However, what I found particularly interesting yesterday was discussions around the lack of private sector pension provision among a large proportion of the workforce, and particularly the difficulties faced by those on low incomes, those who choose to take breaks in their careers to care for children, mainly women, and those who work part-time.

In recognition of these problems, the Government has decided to agree a roadmap and a timeline for the introduction of a new universal supplementary pension savings scheme in 2015. As I indicated to Senators yesterday, this is a Government priority. While I cannot be more specific on the timeline, I do expect progress on it over the coming weeks. The nature of any incentives, including tax incentives, that will encourage and sustain supplementary pension savings among those who do not currently save for their retirement will be a critical aspect of the work that needs to be carried out in designing the new scheme, as will the removal of any perceived impediments to pension saving.

Some Senators made the point that the USC treatment of employer contributions to PRSAs is one such impediment. That is why the Minister considers that it would be more appropriate to examine all of the issues affecting the take-up of PRSAs together so they can be dealt with in the round as part of the work committed to by the Government next year.

We should of course not forget that provision for private pensions is ultimately dependent on the income of individuals and their capacity to forego an element of that income. In this regard, the social welfare system provides pensions based on PRSI contributions and based on means tests for those individuals who do not have sufficient contributions. To purchase an annuity that would provide for a similar level of income to the contributory State pension would require a pension pot of at least €250,000.

The Minister for Finance and his Department are cognisant of the issue at play. However, pending the considerable review set to take place in the area of private pension provision next year, the Minister cannot accept the recommendation at this time.