I thank all the Deputies who contributed to the debate on Second Stage. The Bill reinforces the safeguards already in place for occupational pensions and will make it certain that when individual members of schemes reach retirement age, their pensions will be there for them to ensure their continued prosperity in retirement.
I will comment briefly on a number of the issues raised by Deputies, whom I thank for welcoming the Bill. I agree with them on the importance of pensions.
In the course of his contribution, Deputy Walsh raised the mobility of workers issue. The preservation provisions of the Pensions Act, 1990 ensure that those who move from job to job will have their benefits preserved in each job until pension age.
On the issue of the ageing of the population, referred to by Deputy Brennan, the House should be aware that on a number of occasions I have drawn attention to the demographic patterns which, as Deputies said, indicate a considerable increase in the proportion of elderly people in the population in the first half of the next century. This will have a significant impact on the future costs of social welfare pensions which are set to increase by some 100 per cent by the year 2035. At the same time, the ratio of persons in the economically active age group to those over age 65 is projected to fall. This would result, in the absence of any policy change, in an increasing burden of the cost of pensions falling on future generations of PRSI contributors and taxpayers. These are important factors in any consideration of the development of future pension arrangements and the Social Insurance Fund and require us to consider the capacity of the present financing arrangements to meet these emerging costs.
The pensions industry is also placing considerable emphasis on this issue. One aspect which needs to be examined further in this regard is the effect of long-term growth in the economy. If this is maintained it should increase the resources available to pay for pensions in the future although, as the House will appreciate, there will be many competing claims for any resources freed up as a result of this growth.
The final report of the National Pensions Board, Developing the National Pension System, raised and considered these issues. This report is being considered in my Department and it is intended to bring forward proposals based on the recommendations of the report in the context of next year's budget. In this context, a major survey of occupational pensions schemes, recommended by the National Pensions Board, has been commissioned jointly by the Department of Social Welfare and the Pensions Board. That report will be available in the middle of this year. The last major survey was carried out in 1985 and the results of this new survey will give essential up to date information on occupational cover which will be of considerable assistance when proposals on pensions are being formulated.
Deputy Walsh also alluded to the issue of equal treatment. As I stated in my contribution, clarification of a number of European Court cases and directives on equal treatment as regards pensions are being considered and the outcome of these may necessitate further changes in our pensions legislation. These matters will be considered by the Department in conjunction with the Pensions Board in due course and, if necessary, amendments will be made through a further pensions amendment Bill.
A number of Deputies referred to the wording of section 34 which reads "or is being contemplated" regarding compulsory and voluntary reporting to the Pensions Board. The intent of this wording is to cover the future — in effect, to shut the stable doors before the horse has bolted. I am aware there is some concern in the pensions industry about this wording and the position is being reviewed in consultation with the Attorney General's office and the Pensions Board. The bottom line, however, is that the future has to be covered in this section and, bearing that in mind, I will seek to find a suitable form of words to achieve this.
Deputy Woods referred to section 36 which relates to the replacement of a chairperson and is simply to remove a problem that might arise. If a chairperson resigned or died while in office, there is not any mechanism in the legislation for his or her replacement. I want to reassure Deputy Woods with regard to the new board members that the basic principle underlying the appointment of all members to the Pensions Board is that all of these people will represent and protect the interests of pension scheme members. The mechanism for providing two new members to specifically cover trustee issues is via nominations by the Irish Congress of Trade Unions and IBEC. This is the best manner in which to provide trustee representation on the board.
Deputy Connaughton referred to the necessity for a pensions ombudsman. Other Deputies also raised the issue of information, which is important. The question of an ombudsman is one of the issues facing the new Pensions Board over its term of office and is one of the areas on which it will be asked to report. On the issue of information generally, under the disclosure provisions of the Pensions Act, 1990 information must be made available to pension scheme members via both the annual report of the scheme and requests to the trustees of the scheme. There may be a lack of knowledge among individual members about where to get information and that will need to be addressed. In this regard, the Pensions Board has set up a subcommittee on information and one of the areas it will address is how to disseminate information so that members will be aware of what information is available to them and how to get access to it.
Deputy Brennan raised the question of Telecom Éireann and the modified PRSI rates. I do not propose to go into that issue in detail because it does not relate specifically to the Bill. I dealt with the matter on the Social Welfare Bill and my response to the queries the Deputy again raised this morning is on the record. Because the Deputy has again asked questions I should say that the steps we took in relation to maintaining the modified rate of PRSI for workers in Telecom Éireann covered by the 1993 legislation were fully assessed by the Attorney General. What we have done is regarded by him as constitutional and in line with EU requirements. It would be grossly improper of me as a Minister or the Government of the day to introduce matters which would be considered otherwise. The Deputy can be assured that what we have done is not unconstitutional or in breach of EU requirements.
My understanding is that the workers concerned — those who were employees in 1983 when the modified status was maintained when Telecom Éireann and An Post became State companies and were removed from the direct control of the Department of Posts and Telegraphs — have guaranteed status as employees and are concerned to maintain that status. I understand they would view seriously any move from the status they have at this time as covered by the 1983 legislation. The Government and I are satisfied on the basis of advice from the Attorney General that everything is in order. The modified rate of PRSI does not cover old age pensions, it covers orphans, widows and occupational injuries of a limited kind. Old age pensions are covered by way of State guaranteed pensions.
A number of Deputies, particularly Deputy Quill, raised the question of the taxation limits and increased pension fund investments. In relation to the 15 per cent limit and the general tax limits for pensions this is primarily a matter for my colleague, the Minister for Finance, and the comments will be forwarded to him for his consideration.
Regarding increased pension fund investment in the Irish economy, as Deputies are aware the Minister for Finance announced a joint study to be undertaken in conjunction with the Irish Association of Pension Funds and the Irish Association of Investment Managers aimed at identifying commercially viable opportunities in the domestic economy for the Irish pensions sector in the context of increasing the overall level of pension fund investment in the Irish economy. The study should be completed by mid-year. However, I take issue with Deputy Quill when she says there is a lack of investment opportunities in Ireland. The Deputy is confusing the opportunity for high return, risk-free investments and that of normal risky investments, which may or may not give a return.
This Government sees itself as the guardian of public assets. We want assets to grow and add value and to expand abroad, using the wealth of Government talent. The Government is committed to building up State companies, making them more competitive to serve the needs of consumers and adding value. Already Aer Lingus has made a dramatic recovery, turning losses of £129 million in the last period to profits of £17 million in 1995. This was after a pay-out of £3.3 million in shares to its workers who played such a crucial role in turning the company around.
Privatisation does not add one job to the economy. It does not add one pound in value added. What Ireland needs is more entrepreneurs to invest money in new enterprises. The transfer of ownership is not enterprise. If the Irish Stock Exchange has not enough quoted companies, as indicated by Deputy Quill, this is also a factor of the nature of Irish private enterprise, which is too private and not enterprising enough. Some of the largest companies operating in Ireland are private.
The Deputy should recognise that a high proportion of investment in private and public companies comes from the State by way of grants and tax breaks. It amounts to hundreds of millions of pounds each year and the State does not get a financial return. We invest in these companies for the jobs and the value added. This State investment lessens the risk considerably.
Pension funds should look to new risk ventures which create value and jobs in Ireland. Transferring the ownership of State assets to privatisation would be the lazy way out.
Deputy Wallace and others raised the question of self-employed who were over the age of 56 in 1988. I do not intend to deal with that matter in any detail. It is a social welfare pensions matter and not an occupational pensions matter. However, I would point out, as I did at length on the Social Welfare Bill, that this issue of people being over the age of 56 in 1988 when they were obliged to enter the social welfare system was known in 1988 and it is wrong for Deputies opposite to imply that this has suddenly become an issue. It was an issue in 1988 when the scheme was introduced as I recall when we debated it in the Dáil. It was decided by the then Minister that despite the fact that, in some cases, a person would not have the ten years' contributions required in 1988 they would still be obliged to contribute. In those cases where a person did not have any contributions prior to 1988 and where they did not qualify for a contributory or a non-contributory pension, the contributions they had made to the fund would be refunded to them and that money would be indexed so that there would be no loss to the person concerned in terms of the investments they had made. I am examining the issue as indicated during the debate on the Social Welfare Bill. Whatever I do in that area — I intend to bring forward amendments of various kinds in the pensions area — it is essential that we maintain the requirement that there must be a minimum of ten years' contributions to qualify for a pension. If we were to breach that requirement it would have serious funding problems for our social welfare pensions system. The matter is not closed but I am making the point that, as far as I am concerned, there will be a requirement for a ten year contribution period to qualify for a pension. How we might assist those who are not likely to have the ten year contribution at the age of 66 has yet to be addressed.
Deputy Walsh hoped there would be sufficient time to debate this Bill. I reassure him there will be sufficient time. The Bill was published in mid-December with the specific intention of allowing Members, those in the pensions industry generally and all contributors to and beneficiaries of occupational pensions schemes sufficient time to examine its provisions. I realise it is a technical Bill and we need time to see how it may impact. As Deputy Walsh indicated, it is all the more important to allow a reasonable time scale as the Bill is technical. In this regard I assure the House there is ongoing discussion with the Pensions Board on this Bill. In addition, the Department is currently meeting all those who have made representations on the Bill. This Bill will significantly help to further safeguard the pensions of individual members of pension schemes. I, therefore, commend it to Deputies and ask them to support it.
