Paddy Burke (Fine Gael) | Oireachtas source

I welcome the Minister to the House. This is probably one of the most important pieces of legislation we will pass in this House for many years. We are dealing with ordinary people's money going forward and we are going to make provision for people who will be retiring in the next 30 to 40 years and way beyond. This is, therefore, hugely important.

The preamble in the explanatory memorandum sums it up well. It states:

This Bill is designed to give legislative effect to the establishment of an automatic enrolment retirement savings system for employees in employment not covered by qualifying schemes. It also provides for the establishment of a new State body ... which will administer the system for and on behalf of the participants. The Bill will also provide for the automatic enrolment and re-enrolment of participants in that system and for opting into and out of the system. In addition, the Bill provides for the payment of contributions by participants, their employers and the State, the investment of contributions and the payment of retirement savings out of participants’ accounts when they reach State Pension age.

Therefore, there are three sections involved. Employers, employees and the State are all paying into this. We are making provision for the next 30 to 40 years for people who will be retiring in that time. They will get a pension based on what they have paid in on top of the State pension, which, as the Minister said, will be the bedrock. This will be in addition to that.

The Minister is setting up a new board to run this investment on behalf of the people - the employees - who are paying in. Of course, the State and the employers are paying in as well. There is going to be a huge responsibility on the board to account and make good investments on behalf of people for the next 30 and 40 years and beyond. We are going to be judged after 30 or 40 years as to whether we have introduced a very good Bill or whether we did not do our work properly. It is, therefore, hugely important that this is got right in the first place.

I believe this is a very good Bill. As the Minister said, this has been talked about for the past 25 years and she is now bringing it forward. The Bill has been tweaked here and there and amended and added to and so forth. We have heard over the past couple of weeks from a number of commentators on the national airwaves. Mr. Colm Fagan and Mr. Paul Kenny contributed to programmes in that regard. They said the Minister could have done a better job, or a better job could be done, or a different system of investing people's money would have bigger gains for people with pensions in 30 or 40 years' time. I wonder about what they said or whether there is a different system that would be better. Of course, everybody would like to get more money when they retire. However, it would seem they are proposing that the Government would invest all the money in equities. That was my read of the contributions they made. As we know, equities go up and down, but I presume what they are saying is that, on balance, over 30 or 40 years over the lifetime of a person working, it would even out. That would be taking a gamble with people's money. People are paying in. The State and employers are paying in. It is all hard-earned money from people who want to do the best they can and have the most they can to enjoy retirement. There is a big gamble involved.

I believe the Minister has a good Bill in what she is doing. They system they are proposing has not been tested anywhere in the world. I do not know whether there are any reviews built into the Bill whereby we would have a review after five or ten years to see how investments are going and how the pension pots are doing. Could we carry out such a review? What would it tell us after five or ten years? Would it be good to have a review in it? It may well be, and I think it would be, to see what the potential pensions would be for people going forward and how their savings over five or ten years have progressed.

I welcome the Bill very much. It is a step in the right direction. We heard recently about the UK state pension. As we know, many people here do not get the full State pension because for one reason or another, they were in poor employment that was not paying their contributions when they thought they were being paid and they ended up with a limited or reduced pension. I have seen in the UK that people can buy back anything up to 16 or 17 years to complement the state pension they would be getting already or to try to bring it up to the maximum state pension. I do not think there is any such system here. The Minister might qualify that. It would be a good idea if we had something similar because there are people who are getting a very reduced pension. In most cases, to make additions to their pension, people have to have all of this done before the age of 66 before they retire. Some of those people would be more than retirement age now. It is an area the Minister could look at. The English system is very generous in that it can go back maybe 17 years.

All in all, I welcome the Bill the Minister has brought forward. We will get a better chance to delve into some of the areas I mentioned on Committee Stage. In the meantime, however, the Minister might come back to us and tell us whether we can have a review after five or ten years or whatever, and we will move forward from there.I welcome the scheme. It is a very good step forward. People may not realise how good it will be until they retire.

I have another query. The Minister said, "In order to encourage workers to participate, people who choose to remain in the system will have their pension savings matched on a one-for-one basis by the employer." For every €1 the employee puts in, the employer will put in another. Is that up to a certain amount? The one thing employers want is certainty. If employees put in more and more, there will be a big burden on employers to match it. I presume that employers who do not match it would be breaking the law. That is an area we will have to spell out to employers because, as I said, they like certainty. When they take somebody on, they want to know how much all the different contributions they have to make will be. As I said, some people could afford to pay in more than others, especially at different times of the year or in different years. There is scope in the Bill to do that so that as people move on in life, they can pay more and more into the system and will not be at a set rate the whole way through. I presume they can add more to it as they go along. Maybe the Minister will clarify that.

I welcome the Bill. I wish the Minister well with it.