Written answers

Tuesday, 23 February 2010

Department of Social and Family Affairs

Pensions Provisions

9:00 pm

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Question 92: To ask the Minister for Social and Family Affairs the reason for the continued delay in arriving at a decision on the national pensions framework. [8919/10]

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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Question 97: To ask the Minister for Social and Family Affairs her views on changing pension policy here by standard rating all tax relief on pension contributions and using the proceeds to provide for a universal pension with a top-up based on contributions as advocated by a group (details supplied). [8920/10]

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
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I propose to take Questions Nos. 92 and 97 together.

The Green Paper on Pensions outlined the challenges facing the Irish pensions system in the years ahead, including the sustainability of the system over the longer term in light of demographic change and the adequacy of contribution levels and benefits. The consultation process that followed publication of the Green Paper reflected the wide range of views and interests held by individuals and organisations throughout the country. While there was no consensus on ways to respond to the challenges facing our pension system, it was clear that there were significant issues and problems that people wanted addressed.

Since the Green Paper was published in October 2007, the economic environment has changed considerably and the Government needs to ensure that any decisions we make in the pensions area will be robust enough to withstand the challenges that will arise in the future. We must make decisions now to ensure the adequacy of retirement incomes for this and future generations and, at the same time, develop a system that is affordable and sustainable for the State and for those who sponsor and provide pension schemes.

In the past 18 months or so the Government has taken a number of steps to respond to the immediate difficulties facing pension scheme members, particularly members of defined benefit schemes. These include the establishment of a pensions insolvency payment scheme and a reordering of wind-up priorities so that, in any defined benefit wind-up situation, employees and former employees who have not yet retired may still receive a large proportion of their benefits. The Government has also introduced provisions to allow for more flexible restructuring of pension benefits and stronger regulation regarding remittance of pension contributions. We have also protected people in receipt of the State pension by retaining the rates of pension and other social welfare payments for older people in the recent Budget.

The Government is aware that the wider and longer-term pensions policy issues require a comprehensive and co-ordinated response and has been considering a number of options to address the challenges facing our pension system. Uncertainty in the economic climate has increased the complexity of the decisions we must make but it does not prevent or deter the Government from making these vitally necessary decisions. However, it does require us to give very careful consideration, and it is precisely because the development of the national pensions framework involves decisions on such a wide range of future and complex issues that we have been spending a considerable amount of time working on it.

Taxation policy is a matter for my colleague the Minister for Finance. However, as the Deputy is aware the Renewed Programme for Government includes a commitment to introducing a standard rate of tax relief on pension contributions in the context of the National Pensions Framework. As the framework is still being developed I cannot say what it will include. However, I can say that our objective is a pension system which will deliver an adequate retirement income for all which is, at the same time, affordable and sustainable for the State, and those who sponsor and provide occupational pensions systems. We are determined that the actions we take will be aimed at ensuring that we reform pensions on a basis that is fair, transparent and sustainable.

I expect that the framework will be published shortly.

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