The costs of the various reviews referred to by the Deputy are as follows:
- The third Actuarial Review of the Social Insurance Fund was completed by consultants KPMG in June 2012 at a cost of €153,750 including VAT.
- The Department made a voluntary contribution of € 130,000 to the OECD for its very significant work in undertaking their Review of the Irish Pension System.
- €60,900 was paid to PWC for its support for the Report on Pension Charges 2012.
- In relation to costs for the Critical Reviews of the Pensions Board and the Office of the Pensions Ombudsman, the Steering Group was chaired by Mr. Richard Hinz of the World Bank who gave his time pro bono and who drafted the final report free of charge. Mr. Hinz undertook a number of trips to Ireland to Chair the meetings at no travel cost to the Exchequer with the exception of one flight for a consultation forum in September 2012 at a cost €1,445.78. Accommodation costs for all meetings were paid for my department at a total cost of €1,674.00.
The work undertaken for all of the above reports would have been supported by officials of the Department of Social Protection as part of their wider day to day duties and indeed by a range of other Departments and organisations (e.g. the Pensions Board, Central Bank, Pensions Ombudsman) and wider sectoral interests. In general meetings in relation to the various reports were held in Departmental accommodation or in the premises of the organisation undertaking the work and did not result in further costs arising.
A significant Consultation Forum was held in Farmleigh September 2012 with a catering cost of €1,980.97. To maximise cost efficiency, this was a joint consultation forum for both the OECD review and the Critical Reviews of the Pensions Board and the Office of the Pensions Ombudsman and involved representatives from over 50 sectoral interests.
Actions following Review & Report Recommendations in 2013
(i) In relation to the Actuarial Review of the Social Insurance Fund, the review covers a 55 year period from 2011–2066 and builds on the findings of the 2000 and 2005 actuarial reviews. The findings in the Review inform both short to medium and long term policy development in relation to the social insurance system generally. Projections contained with the report indicate that in the absence of any action to tackle the shortfall, the excess of expenditure over income of the Fund will increase significantly over the medium to long term.
(ii) Regarding the OECD Review of Irish Pensions System (completed in April 2013), the review examines all aspects of pensions in Ireland covering both State pension, private, occupational and public sector pensions. It is an extremely comprehensive report amounting to some 150 pages of analysis and commentary. The report provides for consideration, key findings and a wide choice of suggested measures for reform which would involve a number of Government departments. The report is now being examined in detail with a view to bringing proposals to Government setting out the roadmap for pension reform.
(iii) The Public Service Reform Programme provided for a critical review of the integration of the regulatory functions of the Pensions Board with the Financial Regulator and the merging of the Pensions Ombudsman with the Financial Services Ombudsman. The recommendations of the review group were accepted by Government in April last. The key recommendation from the critical review in relation to the Pensions Board is that an amalgamation of the regulatory function of the Pensions Board with the Central Bank is not recommended at this time, but that the governance structure of the Pensions Board should be restructured with two distinct arms; oversight of the Pensions Board will be undertaken by a three man body called the Pensions Authority, and a separate unpaid Pensions Council, with a majority of members representing consumer interests, will advise the Minister on pensions policy. The relevant legislative measures to implement these changes have been provided for in the Social Welfare and Pension Bill, 2013. The new structure is expected to be operational by year end.
In relation to the Pensions Ombudsman, the key recommendation is to amalgamate the office with the Financial Services Ombudsman and arrangements will be put in place to provide for the implementation of this recommendation in the near future.
(iv) The Report on Pension Charges 2012 was undertaken by my Department with the Central Bank and Pensions Board, and with support from PWC. The primary objective of the report was to gather information on the level of pension charges levied, to assess whether these charges are reasonable and transparent, to report on the findings and to make recommendations. The report highlights a wide range of issues in relation to pension charges and identifies that there are major challenges to be addressed in the two main areas of reasonableness and transparency of charges. The launch of the Report on Pension Charges report was followed by a three month consultation with stakeholders. Following the consultation period, it was agreed by Government in April 2013 that the recommendations contained in the report will be implemented, and this work has commenced. The first task I will be giving the new Pensions Council is to monitor the implementation of the recommendations in the Report on Pension Charges and advise me if further actions are needed.
