Tommy Broughan (Dublin North East, Labour)
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To ask the Minister for Social Protection if she will outline her plans for a universal pension scheme; her views on when any such proposals will be published; and if she will make a statement on the matter. [3920/13]

Joan Burton (Dublin West, Labour)
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The overall objective of the pension system in Ireland is to provide an adequate and sustainable basic standard of living through direct State supports and to encourage people (through generous tax reliefs) to make supplementary pension provision so that they may have an adequate income replacement rates when they retire from work. Secure and adequate finances are one of the fundamental components of a happy and active retirement. Compared to the rest of the population, Ireland’s older people have the lowest poverty rates (at 0.9%) and are least likely to be at risk of poverty. Significant reform of our pensions systems is necessary to safeguard future sustainability and adequacy.

Recent figures indicate that only half of workers aged between 20 and 69 years have a private pension and this relatively low coverage is of major concern to the Government. The sustainability of the pension system is a particular concern because of the demographic challenges Ireland faces, the associated increases in pension (and other age related) costs, and the deterioration in the public finances. This means that, in the future, the task of financing increased pension spending will fall to a diminishing share of the population as demographic projections indicate the ratio of working age to pensioners will decrease from 5.3/1 at present to 2.1/1 by 2060. Life expectancy in Ireland is also increasing – in the mid 1990s, life expectancy for males was 73 and for females 78.5. In 2041, it will be 86.5 and 88.3 respectively. Whilst this is very welcome development, it also presents very real and obvious public policy challenges.

While the State pension is expected to provide sufficient retirement income for the lowest paid workers, many people retiring from work will have a significant income gap if they do not have supplementary private pension provision. It is a priority for the Government to increase supplementary pension coverage, particularly amongst the lower paid and those with gaps in their employment. The Programme for Government includes a commitment to reforming the pension system to progressively achieve universal coverage, with particular focus on lower-paid workers. A soft-mandatory approach such as that envisaged by an auto-enrolment scheme, using economies of scale to achieve greater cost efficiencies for the member, is a very proactive way in which we can increase supplementary pension coverage. However, it is recognised that introduction of such an initiative would be best supported by a more favourable economic environment than is currently the case.

Recent discussions on the pensions system in Ireland and future pension policy identified the need for a short and focussed examination on the direction of long term policy to ensure a modern, sustainable, and adequate pension system taking into account the impact of the economic downturn. In this regard, the OECD has been commissioned to review long term pension policy in Ireland and this will include consideration of an auto enrolment system. It is expected that the report from the OECD will be finalised in the first quarter of this year.