Clare Daly (Dublin Fingal, Independent)
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555. To ask the Minister for Employment Affairs and Social Protection when she plans to launch the public consultation on pension reform further to her announcement in November 2017; the details and timeframe of the public consultation process; the steps she will take to amend section 48 of the Pensions Act 1990 and the Taxes Consolidation Act 1997 that will provide pension members with more choice, such as approved retirement funds when scheme trustees decide to wind up pension schemes; and if she will make a statement on the matter. [8463/18]

Regina Doherty (Meath East, Fine Gael)
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Pensions reform is a Government priority and I can confirm an intention to publish and commence the implementation of a pensions reform plan in the coming weeks. This reform plan will detail measures to reform both our State and supplementary pension systems.

Perhaps the two most fundamental reform measures contained within this plan will relate to the introduction of the ‘Total Contributions Approach’ for the State pension contributory from 2020 and the development of a new automatic enrolment retirement savings system for employees without supplementary pensions coverage.

It is proposed that the ‘Total Contributions Approach’ (TCA) will replace the current ‘yearly average’ system from 2020. This will make the level of pension more directly proportionate to the number of social insurance contributions made by a person over his or her working life, with significant pension credits granted to people who have taken time out of the workplace to perform caring duties. The TCA will eliminate the anomalies inherent in the current averaging system whereby a person can qualify for a full pension based on a small number of years of payments (currently as little as 10 years' contributions) provided they have no gaps in their record, whereas a person with more than 10 years contributions but with a significant gap in their record might be paid a reduced rate.

Automatic enrolment would see a transition from the current and purely voluntary supplementary pension system to one which will, subject to certain parameters, automatically enrol employees into a quality assured retirement savings system. It is planned that this reform, where the saver will maintain the freedom of choice to opt out, will include employer and State financial incentives to encourage long term saving and asset accumulation amongst those who may otherwise suffer a reduction in living standards at retirement. It will increase the wellbeing, financial security, and independence of future retirees.

It is intended that following publication of the reform plan, two separate public consultation processes will be launched on the ‘Total Contributions Approach’ and automatic enrolment. The purpose of both of these consultations will be to inform the design of both systems. The details and timeframe of them will be confirmed subsequent to the publication of the reform plan although I can say it is my intention to begin them by Q2 of this year.

With regard to the second part of the Deputy’s question, the wind-up options in section 48 of the Pensions Act 1990, as amended, are contingent on the requirement that the scheme’s policies or contracts are approved by the Revenue Commissioners under the Taxes Consolidation Act 1997, as amended. The Pensions Act sets out the circumstances in which retirement benefit schemes are approved by the Revenue Commissioners for tax purposes. In other words, transfers from the scheme being wound up must be made into schemes or products approved by the Revenue Commissioners and which, therefore, comply with Revenue rules. Section 772 of the Taxes Consolidation Act allows for flexible options on retirement, i.e., the Approved Retirement Fund (ARF) option. The purchase of an ARF is not available to members of defined benefit schemes, subject to certain exceptions. Legislation and policy on taxes and access to ARFs are a matter for the Department of Finance.

I hope this clarifies the matter for the Deputy.