Brian O'Shea (Waterford, Labour)
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Question 106: To ask the Minister for Social and Family Affairs the way he will fund the commitments set out in the Programme for Government on State contributory pension and other schemes in view of the projected deficit in the social insurance fund. [32191/07]

Martin Cullen (Waterford, Fianna Fail)
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The Programme for Government contains a commitment to 'Increase the basic State pension by around 50% to at least €300 per week by 2012'. Changes to pension rates are considered each year in a budgetary context and any changes proposed for 2008 would be announced in the forthcoming Budget.

It is estimated that the cost of increasing contributory pensions, which are financed through the Social Insurance Fund, to €300 would be €1,705 million in a full year.

The exact effect of such an increase on the Social Insurance Fund would be contingent on the sequencing of changes to pension rates in the period to 2012 but, in the short term, the Fund has sufficient resources to provide for this increase and increases to other benefit schemes.

The second Actuarial Review of the Social Insurance Fund, which was required under Section 10 of the Social Welfare (Consolidation) Act, 2005 was published on 17th October 2007 in conjunction with the Green Paper on Pensions.

The findings of the Review include:

That the Fund will move from being in surplus to running a deficit in 2009; and

That on foot of the annual deficits from 2009, the accumulated surplus will be exhausted by 2016.

In this context it should be noted that legislation provides that the Exchequer is the residual financier of the Fund and Exchequer contributions to cover shortfalls in contributions were the norm for over forty years.

Any shortfall in the cost of benefits paid would, in the normal way, be addressed by Exchequer subvention. Other approaches to such an annual deficit would be a matter for the Government to consider in a future budgetary context.