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 Header Item Pension Provisions (Continued)
 Header Item Accident and Emergency Services Provision

Wednesday, 24 April 2013

Dáil Éireann Debate
Vol. 800 No. 4

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(Speaker Continuing)

[Deputy Joan Burton: Information on Joan Burton Zoom on Joan Burton] The review also shows us what other OECD countries do with comparable systems. The shared objective of everybody in this House, from all parties and none, is to provide for a sustainable pensions system. As I believe the former Taoiseach, Mr. Bertie Ahern, said, a pensions system is expensive to provide for. The objective is to provide for 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 in order that they may have an adequate income replacement rate when they retire from work. 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 make supplementary private pension provision.

  The old age pension is commended in the report as a very significant support because pensioners have the lowest rate of risk of poverty of people receiving income from the Department of Social Protection. That is to be celebrated. However, only 51% of people in employment between the ages of 20 and 69 years have pension coverage. I am particularly concerned that women and low paid workers are in that group and do not make sufficient pension provision.

  The relatively low rate of pension coverage is a key concern of the Government. That is why the programme for Government includes a commitment to reforming the pensions system to achieve universal coverage progressively, with a particular focus on lower paid and female workers. It is for this reason the introduction of an auto-enrolment system is being considered.

  The report does not make absolute choices. It ranks potential choices in order of preference. The authors have suggested a mandatory system. The second suggestion is an auto-enrolment system, which the Deputy stated Fianna Fáil had proposed in its last pensions document in early 2010. In moving to any system we must be conscious of the economic circumstances of citizens. As a country, we must plan for pensions, even if it might be difficult for people to put aside additional funds for pensions out of already stretched incomes. The OECD and I are very conscious of this. However, to paraphrase Mr. Rahm Emanuel, sometimes a time of crisis is the time to plan for the future, even if one cannot do what one wants immediately.

The policy recommendations involve a number of Departments. Let me summarise the main findings. The economic situation of pensioners in Ireland is comparatively good, both with respect to other age groups in the population and by international comparison. Ireland is facing challenges regarding the financial sustainability of the pensions system as the population ages. Private pension coverage, both in occupational and personal pensions, is uneven and needs to be increased urgently. Pension charges are expensive for small occupational and personal pension schemes. The State pension system lacks transparency. The State pension scheme could be modernised to encourage working longer, in line with the prevailing international trend. The new scheme for the public service is being phased in only very slowly and unlikely to affect a majority of public sector workers for a long time. These are the key findings. None of the options set out has been costed.

  With regard to the Deputy's specific query on defined benefit schemes, he will be aware that Fianna Fáil suspended the funding standard in 2008 after the bank guarantee on the assumption that the difficulties with pension schemes, as with the difficulties with the banking system, would be very short-lived. It was believed we would be out of the difficulty in a couple of months. Many defined benefit schemes are experiencing difficulties. I have been engaged in very intensive work with all of the stakeholders involved in the schemes. They are very important and we are examining a range of proposals. The Deputy has issued some thoughts on the matter. He is suggesting the guaranteed amount for existing pensioners could be €6,000, or €12,000 to equate with the State pension. There are difficult decisions to be made.

  Reference was made to various surveys of living costs. The irony is that in Ireland there is an extraordinary amount of savings. Some people have considerable savings because they are concerned about the future, while others find it extremely difficult to make ends meet.

Deputy Willie O'Dea: Information on Willie O'Dea Zoom on Willie O'Dea The report makes certain recommendations about public sector pensions. It is stated a single scheme should be devised for both public servants and those who would otherwise have private pensions. Does the Minister agree with this?

  The report states the incentives for people to save are not properly aligned with the notion of maximising the retirement benefit for low and middle income earners. Does the Government have proposals to advance in this regard?

  Does the Minister share the reservations of the OECD group on encouraging pension fund managers to invest in major domestic infrastructural projects?

Deputy Joan Burton: Information on Joan Burton Zoom on Joan Burton The most important incentives or the tax breaks for people who invest in private pensions reached their height under Fianna Fáil. We know of quite a number of individuals who were able to build up pension pots of €20 million to €30 million as a consequence of the extraordinary pension-related tax incentives Fianna Fáil provided for very-----

Deputy Willie O'Dea: Information on Willie O'Dea Zoom on Willie O'Dea The Minister has been in office for two years. What are her proposals?

Deputy Joan Burton: Information on Joan Burton Zoom on Joan Burton I am just talking about what we have inherited. My view on tax incentives is set out in the programme for Government. I had this discussion over a long period with Fianna Fáil's former leader Mr. Brian Cowen when he was Minister for Finance. Finally, after several years of debate with me, he commissioned a study that indicated there were extraordinary pension pots of €20 million to €30 million arising from the Fianna Fáil tax schemes.

The programme for Government implies the State should not tax-subsidise pension provision where pensions in excess of €60,000 per year are provided for. Most pensioners listening to us will know that a pension of €60,000 per year is a very handsome one for most. The tax relief, therefore, should be targeted at lower and middle income earners. The Deputy will be aware that in the budget proposals for this year the Minister for Finance has agreed to bring forward legislation, commencing next year, to address the structuring of reliefs.

The Deputy referred to alignment. The issue is very simple. Only 51% of people have made private pension provision. Those who are not covered include women, lower paid workers and those who change jobs frequently. The latter leave behind any pension entitlement they accumulate in a given job. The proposal made in the report, with which I broadly concur, is that pension relief should be targeted at the people in question. I hope the Deputy will be able to agree with this.

Accident and Emergency Services Provision

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett In the past week or so a local newspaper in County Wicklow reported on what can only be described as a secret meeting involving the Tánaiste and senior administrators and medical personnel from St. Vincent's and Loughlinstown hospitals. It was also attended by Deputies from County Wicklow and the Labour Party Senator Aideen Hayden.


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