As amendments Nos. 1, 2 and 27 to 33, inclusive, are related, they may be discussed together.
Social Welfare (Miscellaneous Provisions) (No. 2) Bill 2010: Report Stage
I move amendment No. 1:
In page 5, line 23, to delete "ACT 2001;" and substitute the following:
"ACT 2001, THE PENSIONS ACT 1990, AND THE TAXES CONSOLIDATION ACT 1997;".
The amendment to the Pensions Act 1990 that I am introducing arises from proposals from the Irish Association of Pension Funds and the Society of Actuaries in Ireland, under which a new type of annuity policy, which will make reference to euro-nominated bonds, will be available for purchase by Irish pension schemes and investors. In purchasing this new type of annuity and-or associated bonds, pension schemes will benefit from higher yields than are currently available from French and German markets, thereby reducing the cost to pension schemes in meeting their pension liabilities and the requirement of the funding standard. In an Irish context, the National Treasury Management Agency will issue long-term bonds with a period appropriate to match the funding needs of a typical pension scheme. These bonds will be available for purchase when the insurance industry issues annuities based on Irish yields. These annuities can be bought by pension schemes to match their pensioner liabilities. It is proposed to make these bonds available from 1 January 2011. They can, of course, be purchased in the normal course by pension schemes.
We are all pleased that we will have our own bonds. Some pension companies in this country have a lot of money. Some of them have invested pensioners' money very badly. There is a great deal of concern among punters whose money has been spent by such companies. Many of them have lost a great deal of money. We were told not many years ago that the safest investment one could make in this country was in bank shares. The pension funds were very wrong in that regard. I would like to ask the Minister a straight question about Irish agencies, particularly pension funds, that may want to buy these bonds. I hope they will do so. Are these bonds safe for Irish investors? That is the question I want to ask. Are they safe for those whose money will be invested in them? We have had many bonds and many investment companies. They are like economists. One set of economists told us the boom would last until 2015 or 2016. Another set of economists said we would have a soft landing. As long as they are getting paid by the agency of the day, they will say what they are told to say. They got it wrong in the past. I want to know how safe Irish pensioners' money will be when it is invested in these bonds.
As these bonds will be issued by the National Treasury Management Agency, they will be deemed to be sovereign debt. The Government's clear policy is that it will honour all sovereign debt.
I have had a chance to read the Minister's brief, which has just been circulated. I am a little surprised because I understood an opportunity would be provided for pension trustees to purchase Irish sovereign bonds. The Minister's brief says trustees of pension schemes will be given an option to buy sovereign annuities issued by EU member states. I am trying to figure out the implications of that. Does this mean trustees could buy Greek bonds? If another EU country was in serious economic difficulties and its bond yields shot up, could trustees switch their funds from Irish bonds to that country's bonds? I am a little taken aback in that regard. I did not think that was what the industry was looking for. A few months ago, there was a certain nervousness about the question raised by Deputy Ring. There was some concern about what would happen in the event of a possible default. I would like the Minister to outline the provisions that have been made in the event of such bonds not being secure at some future stage. What kind of underwriting is the Government or the State prepared to do on behalf of such pension funds?
When we discussed the Social Welfare (Miscellaneous Provisions) (No. 2) Bill 2010 on Committee Stage, I asked the Minister to give some reassurance to those who have money and resources in this country. I have been told that over €96 billion is being saved in this country. People are right to be worried. I asked the Minister to reassure them in relation to the post offices, in particular. There was a great concern in that regard. Many elderly people, in particular, were worried. I am afraid that people will start to withdraw money and that, in turn, will lead to robberies and people getting beaten up. I want the Minister to be strong and to assure the people that this scheme is solid and their money is safe. When pension companies invest their money on their behalf, they should be assured that it is safe and backed by the State. I want the Minister to be strong. He should reassure the people that their money is safe, particularly in the post offices.