Thursday, 14 December 2006
Department of Social and Family Affairs
Question 8: To ask the Minister for Social and Family Affairs the number of PRSA holders; the percentage and number of the working population who have not made additional pension provision; the percentage and number of the working population who have additional pension coverage; the percentage of the working population who hold PRSAs; and if he will make a statement on the matter. [43277/06]
Question 23: To ask the Minister for Social and Family Affairs the measures that have been taken and that are planned to increase long term pension provision; and if he will make a statement on the matter. [43301/06]
Question 44: To ask the Minister for Social and Family Affairs if he has completed his consideration of the recent report he received from the Pensions Board entitled Special Savings for Retirement Report on Mandatory Pension System; and if he will make a statement on the matter. [43136/06]
Question 76: To ask the Minister for Social and Family Affairs the progress that he has made since 2002 in ensuring that lower income groups have an earnings related pension when they retire; the figures for supplementary pension coverage for low income groups in 2002 and 2006; and if he will make a statement on the matter. [43286/06]
I propose to take Questions Nos. 8, 23, 44, 76, 78 and 82 together.
The most recent results from the Central Statistics Office (CSO) Quarterly National Household Survey show that in the first quarter of 2005 51.5% of those at work had supplementary pension coverage. With a working population of just over 2 million, these figures suggest that about 1.03 million workers have a supplementary pension cover with 0.97 million without such cover. At the end of September 2006, a total of 83,790 PRSAs had been opened which represents just over 4% of those at work.
The Quarterly National Household Survey does not provide information on the income of those with supplementary pension cover. However, an analysis of EU-SILC data undertaken in the context of the Pensions Board report on mandatory pensions suggests that coverage varies from 9.5% to 37.6% in the bottom four income deciles. Pensions coverage for the key National Pensions Policy Initiative target group, those aged 30 years and over, stood at 58.6% in the 1st quarter of 2005. This coverage rate has moved little in recent years.
As the House will be aware, in early 2005 I asked the Pensions Board to undertake a review of overall pensions strategy because I considered that, on the basis of the progress being made at that time, there was little prospect of reaching our targets for pensions coverage within a reasonable timescale. The Pensions Board completed its work in November 2005 and I published the National Pensions Review report in January this year.
The Board reaffirmed the various targets recommended in the original National Pensions Policy Initiative which included a retirement income, from all sources, of 50% of pre-retirement income, a social welfare pension equating to 34% of average industrial earnings and a supplementary pensions coverage rate of 70% for those aged over 30 years. The Pensions Board has recommended enhancements to the current voluntary system of supplementary pensions as it considers that it has the potential to deliver significant improvements in coverage.
However, no truly voluntary pensions system has been able to deliver the sort of coverage rates for which we are aiming. In that context, I asked the Pensions Board to explore in more detail the ideas for a mandatory or quasi-mandatory system which had been set out in the National Pensions Review.
In August, the Government published the Pensions Board report, Special Savings for Retirement, in which the Board suggested a model which could be considered if it were decided that a mandatory system of supplementary pensions was required. The model was aimed at low to middle earners and entails mandatory contributions of 15%, shared between employers, employees and the Exchequer, on earnings between â¬15,000 and â¬60,000. This would be backed up by an improved social welfare pension, which would increase from a current level of 33% of Gross Average Industrial Earnings to 40%. A timescale of 10 years was suggested for full implementation.
As the House is aware the Government has committed itself to producing a Green Paper on pensions as part of the social partnership agreement Towards 2016. The Green Paper will outline the major policy choices, the challenges in this area and the views of the social partners. The two reports completed by the Pensions Board â the National Pensions Review and their report on mandatory pensions, Special Savings for Retirement will be major inputs to the Green Paper.
It is expected that the Green Paper will be published by the end of March next year. Following a consultation process, the Government will publish a framework for future pensions policy later in the year.