Written answers

Tuesday, 12 December 2006

Department of Social and Family Affairs

Pension Provisions

11:00 am

Photo of David StantonDavid Stanton (Cork East, Fine Gael)
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Question 381: To ask the Minister for Social and Family Affairs the amount in relation to pensions schemes for which the Pensions Board has oversight provided in recent years to finance the Pensions Board as a percentage of the total amounts contributed or invested by all contributors in the schemes in question, the value of PAYE, PRSI and other tax concessions including exemptions of net income of approved superannuation funds on the contributions and funds to and in such schemes, the estimated costs of administration and fees imposed by the fund managers, and any other firms or agents receiving commissions, fees or other payments, out of or arising from contributions and the management of the funds in such schemes. [42697/06]

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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Much of the information requested by the Deputy is not available. However, in order to give an indication of the position, such estimates that are available are used in the following together with published statistics. Fees received from occupational pension schemes and providers of Personal Retirement Savings Accounts largely finance the Pensions Board. Details of the expenditure incurred by the Board together with its income from fees in each of the last three years is set out as follows:

YearExpenditureFees from Occupational Pension SchemesFees from providers of Personal Retirement Savings Accounts*
€m€m€m
20034.53.950.130
20045.04.100.205
20055.64.100.341
* The figure provided relates to fees relevant to the year in question but not necessarily received in that year.

The remainder of the income of the Board includes payment from the Department to cover the cost of the National Pensions Awareness Campaign, sale of publications and a temporary subvention in respect of the costs of developing and regulating PRSAs. The last mentioned was put in place to cover costs pending the development of an adequate PRSA fee base.

The Pensions Board does not maintain statistics on the assets of occupational pension schemes or contributions made to such schemes. However, the Irish Association of Pension Funds in its Asset Allocation Survey 2005 estimated that at year end the volume of assets under management was €77.9 billion.

With regard to contributions to schemes, work undertaken in connection with the National Pensions Review, published in January this year, estimated that in 2006 contributions to defined benefit and defined contribution schemes by employers and employees would amount to about €4.3 billion. At this stage, the Pensions Board is estimating total expenditure for 2006 at about €5.7 million and this represents about 0.1% of estimated contributions to schemes.

There is no recent information available on the fees and administration charges incurred by pension schemes. With regard to the cost of tax forgone on pension contributions, this information is provided for the three income tax years 2001 to 2003, the latest year for which it is available.

Cost of Income Tax relief relating to pension contributions
Type of Pension Contributions200120022003
€ million€ million€ million
Employees' Contributions to approved Superannuation Schemes389563622
Employers' Contributions to approved Superannuation Schemes498623564
Exemption of Net Income of approved Superannuation Funds (Contributions plus Investment Income less Outgoings)9381,2721,434
Retirement Annuity Contracts (RACs)185251264
Personal Retirement Savings Accounts (PRSAs)*N/AN/A6
Total2,0102,7092,809
*Figures for PRSAs reflect the relative early stage of the scheme which was introduced in 2002.

It should be noted in relation to the tax year 2001, that as PAYE taxpayers were charged to tax on their earnings in the period from 6 April to 31 December 2001 and self-employed taxpayers were assessed to tax for that short year on 74% of the profits earned in a 12 month accounting period, the cost figures will not be directly comparable with those of later years. It should also be noted that these costs are tentative and that efforts are being made to improve information on the cost of tax relief for pensions.

Photo of David StantonDavid Stanton (Cork East, Fine Gael)
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Question 382: To ask the Minister for Social and Family Affairs his views on increasing the representation of workers and other contributors to the pensions funds on the Pensions Board to reflect the fact they have the most vital interests in the effective oversight of the pensions industry; his views on reducing the appearance of potential bias in the representation by vested interests that may not be aligned with the interests of workers, the self-employed and pensioners; and his further views on whether nominations to the board in question should become subject to review by the Joint Committee on Social and Family Affairs to ensure that the interests of workers are adequately represented on the board. [42698/06]

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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The Pensions Board is a representative Body, comprising a chairperson and sixteen ordinary members which is appointed by the Minister for Social and Family Affairs, under the provisions of the Pensions Act, 1990. It is important that the Pensions Board membership should comprise a diverse range of skills dealing with the different aspects of pensions schemes, while at the same time ensuring that the interests of all stakeholders in this area are represented. The Pensions Act requires that the ordinary members of the Board consist of 1 representative of each of the actuarial, accounting and legal professions with other interested groups represented by 2 union representatives (including 1 scheme trustee), 2 employer representatives (including 1 scheme trustee), 2 representatives of occupational pension schemes, 1 representative of pensioners, 1 representative of consumer interests, 1 representative of the Department of Social and Family Affairs and 1 representative of the Department of Finance. In addition, there are 3 direct nominees of the Minister. Overall, I am satisfied that the current representation of the Board and the manner of its appointment is comprehensive and balanced and ensures that the views of all interests are well represented in the regulatory and policy advice work of the Board. I will, however, keep the matter under review.

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