Dan Neville
Ceist:109 Mr. Neville asked the Minister for Finance if surpluses in the social insurance fund and the pension contributions of public servants will be lodged to the national pensions reserve fund. [4712/04]
Amharc ar fhreagraTuesday, 17 February 2004
Ceisteanna (27)
Freagraí scríofa
The National Pensions Reserve Fund Act provides for the establishment of a pensions reserve fund to meet as much as possible of the cost to the Exchequer of social welfare and public service pensions from the year 2025. The Act further provides that the annual contribution to the fund by the Exchequer shall be an amount equivalent to 1% of gross national product. There is no provision to lodge either the surplus of the social insurance fund or the pension contributions of public servants into the fund.
I gave consideration to transferring the social insurance fund surplus into the national pensions reserve fund when drafting the legislation. However, I decided against that option for a number of reasons. The social insurance fund, which holds the proceeds of employer, employee and self-employed social insurance contributions, makes benefit payments for a wide range of social insurance contingencies. As well as old age, it also pays for disability, unemployment and other benefits. Therefore, while the national pensions reserve fund was established to meet the sole contingency of old age, the social insurance fund meets a range of demands, many of which are short term in nature. Having regard to this, it would be impractical to try to apportion the surplus between these various contingencies. In addition, given the liability structure, the wide range of contingencies covered and future demands on the fund, it is likely that it will be necessary to draw down on the reserves of the social insurance fund long before the initial 2025 draw down from the national pensions reserve fund.
As regards public sector pension schemes, the majority of these schemes are financed on a "pay as you go" basis. The purpose of the national pensions reserve fund is to move from a complete reliance on a "pay as you go" basis for pension funding to a situation of a partial funding of future liabilities. The national pensions reserve fund will not meet the full cost of future Exchequer pension liabilities. The annual contribution of 1% of gross national product is considered to be the most appropriate, feasible and efficient way to make the necessary Exchequer contribution to the partial funding of all future Exchequer social welfare and occupational pension liabilities on an ongoing basis.