John Brady (Wicklow, Sinn Fein)
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78. To ask the Minister for Social Protection the steps he is taking with regard to pension reform, including closing the gender pension gap; and if he will make a statement on the matter. [2767/17]

Leo Varadkar (Dublin West, Fine Gael)
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My Department will develop, publish and commence the implementation of an Action Plan for the reform of pensions this year. This Action Plan will include a road map for the reform of the State pension, rationalisation and reform of the Defined Benefit pension landscape, transposition of the IORP2 directive and the introduction of auto-enrolment Defined Contribution pensions for all working people.

All reforms we will propose to the pension system will be based on the idea of fairness and equality. The current gap between State pension payments made to men and women over the age of 66 averages out to a difference of 2%. Although this 2% gap between genders is not ideal, it does compare favourably to our EU counterparts.

The National Pensions Framework (2010) proposed that a “Total Contributions Approach” (TCA) should replace the yearly average approach for new pensioners from 2020. The aim of this approach is to make the rate of contributory pension more closely match contributions made by a person. Officials of my Department are currently working on the detailed development of the TCA. It is planned that, following receipt and analysis of data from the forthcoming independent Actuarial Review of the Social Insurance Fund, a consultation process will be conducted in the middle of this year, and following this, proposals on the final details of the scheme will be made by the Government to the Oireachtas before the end of the year.

It’s worth noting that this is a very significant reform with considerable legal, administrative, and technical elements in its implementation. An important element in the final design of the scheme will be the position of people who have gaps in their contribution records for various reasons, and this factor is being considered very carefully in developing this reform.

The Pensions Authority is the independent body responsible for regulating occupational pension schemes and ensuring compliance with the Pensions Act. My Department and the Pensions Authority are working on proposals for the reform and simplification of pensions, the purpose of which is to impose higher standards on all occupational schemes. The reform proposals are intended to apply equally to defined benefit (DB) provision to ensure that those charged with running DB schemes do so in a manner which provides greater security for their members. Standards in respect of pension schemes will be further enhanced by the transposition of the new IORPS 2 Directive within the next two years.

In relation to supplementary private pensions and the gender gap, the rate of coverage in Ireland is almost equal at approximately 47% of those in employment for both men and women. However, it would be true to say that there are gender gaps in terms of the value of private pensions savings. Given that private pensions are largely a function of the amount contributed by employees, this gap reflects gender differences in employment patterns, notably in pay, working hours and career duration.

In relation to the supplementary coverage of 47% more generally, despite the considerable efforts by Governments and the pensions industry to promote and incentivise voluntary participation in supplementary pensions, the marginal changes in coverage over the last 20 years indicates that the voluntary approach to pensions participation is not achieving the desired goal in terms of increasing coverage to an appropriate level. Therefore, it is my intention to bring forward proposals for an auto-enrolment system for those workers without retirement savings. This is to address a situation where future retirees will suffer unwanted reduction in living standards at retirement.

Detailed analysis and consultation will be required in order to ensure that any system proposed adequately addresses the needs of the target membership and the gender issue will be closely considered as part of this process.

I hope this clarifies the matter for the Deputy.