Dáil Éireann díospóireacht -
Tuesday, 2 Feb 1999

Vol. 499 No. 3

Written Answers - Social Insurance Fund.

John Gormley

Ceist:

105 Mr. Gormley asked the Minister for Social, Community and Family Affairs if he has satisfied himself with the prospects of the long-term viability of the social insurance fund; and if he will make a statement on the matter. [2518/99]

Minister for Social, Community and Family Affairs (Mr. D. Ahern):

The social insurance fund is central to the provision of social welfare services and to the economic and social life of the country. The fund provides for the pensions of an earlier generation of contributors and also for benefits to people who are affected by a range of contingencies such as illness or unemployment. The social insurance fund is the primary method of funding social welfare pensions and contributory pension expenditure represents approximately 69 per cent of the total expenditure from the fund. I am fully committed to safeguarding the long-term security of the fund and, in recognition of the importance of the pensions area generally, a number of important developments have already taken place.

The actuarial review of social welfare pensions, which I launched in September 1997, covers the period from 1996 to 2056. This report is a major contribution to the debate regarding future social welfare pension provision. While the report concludes that the funding provision in respect of pensions, given current contribution levels, is relatively stable for the next 20 years, it also shows that the position thereafter, when a large increase in the number of older people is projected, is more serious. Following the report, a provision was introduced in the Social Welfare Act, 1998, so as to enable similar actuarial reviews to be carried out every five years. These reviews will play a key role in monitoring future growth in the elderly population and the associated pension funding implications.

The findings of the actuarial review fed directly into the national pensions policy initiative which was sponsored by my Department in conjunction with the Pensions Board. Securing Retirement Income, the report of the Pensions Board relating to the Initiative was published in May 1998. The report examines various strategies to expand provision for retirement income generally and includes a number of major recommendations regarding social welfare pensions. This included a recommendation that steps should now be taken to establish an explicit mechanism to fund, at least partially, the prospective substantial growth projected in social welfare old age pensions. I welcomed the report and indicated on behalf of the Government that the board's proposal in relation to part pre-funding of pensions deserved full examination.

A working group comprising representatives of relevant Government Departments and the Pensions Board was established in July 1998 to carry out this examination and it is expected that the group will report its findings next April. The recommendations of this group will inform future consideration of social welfare pension funding, including the long-term viability of such funding and the role of the social insurance fund.

Overall, this is a very important time for pensions policy. We need to look comprehensively and very carefully over a relatively short time frame at the present position. We then need to make decisions and, most importantly, to carry these decisions through so that we address and deal with the medium to long-term issues. I am fully committed to the enhancement and development of the social insurance fund so as to ensure that the living standards of future generations of pensioners will be protected.

The national pensions policy initiative, the actuarial review and the setting up of the working group to examine pre-funding of pensions are important steps towards achieving that aim.