Dáil Éireann Debate, Tuesday - 23 March 2010
579 Deputy Joan Burton asked the Minister for Social and Family Affairs the position regarding the Bord na Móna staff pension fund; the process for establishing transfer values of the pension rights of individual staff members; the deduction that is applied to such transfer values; and if she will make a statement on the matter. [12609/10]
Amharc ar fhreagra583 Deputy Joan Burton asked the Minister for Social and Family Affairs the financial position of the staff pension scheme at Bord na Móna; the process and formula for calculating the transfer value of individuals’ pension rights from this scheme; the deduction that is being applied to the normal transfer value payable; and if she will make a statement on the matter. [12654/10]
Amharc ar fhreagraI propose to take Questions Nos. 579 and 583 together.
Due to staff action currently being taken, I regret that I am unable to provide the information sought by the Deputy.
580 Deputy Aengus Ó Snodaigh asked the Minister for Social and Family Affairs from where the money necessary for the proposed once-off bonus payment relating to auto-enrolment pensions, as described by the recently launched national pensions framework, will come. [12624/10]
Amharc ar fhreagraThe recently published National Pensions Framework is the Government's plan for future pension reform. It encompasses all aspects of pensions, from social welfare to private occupational pensions and public sector pension reform. Development of the framework was informed by the range of views raised during the comprehensive consultation process which followed publication of the Green Paper on Pensions. The aim of the framework is to deliver security, equity, choice and clarity for the individual, the employer and the State. It also aims to increase pension coverage, particularly among low to middle income groups and to ensure that state support for pensions is equitable and sustainable.
At present only 50% of workers have a private pension, with low levels of coverage among moderate to middle incomes a particular concern. While the State Pension is expected to provide sufficient retirement income for the lowest paid workers, most people will have a significant income gap if they do not have some extra private pension provision. Inertia and procrastination are among the main reasons for not taking out a pension. A key element of the framework is the introduction of a new auto-enrolment system which provides a way of overcoming this problem.
Employees earning above a certain income threshold will be automatically enrolled into this new scheme, with the employee, their employer and the State all making contributions. Those employees already in a more favourable occupational pension scheme will not be enrolled.
For those who are included in the scheme, contributions will only be paid on earnings above a certain minimum level and below a certain maximum. The level of these thresholds will be decided closer to the implementation date and they will be set in such a way as to ensure that the scheme focuses on those on low and middle incomes.
Within these thresholds, the employee will pay 4% of their salary, with this being topped up by 2% from their employer and a further 2% by the State. The State's contribution will therefore be equivalent to 33% tax relief. The same 33% State contribution will apply to existing occupational and personal pension schemes and will replace the current system of tax relief at the standard and higher rates. This will represent a major increase in State support for the pensions of lower paid workers.
Employees will be able to opt out of the scheme after a period of 3 months. While they will be automatically re-enrolled every 2 years, they can opt out again if they wish. As an additional incentive to encourage people to remain in the scheme, the Government has decided that a once-off bonus payment will be paid, to people who stay in the scheme for 5 years without a break in contributions.
An implementation group is being established to develop the legislation, regulatory and administrative infrastructure required to introduce the auto-enrolment scheme, including in relation to the once off payment, and the other elements of the framework. We expect the implementation phase to take three to five years to complete. It is intended that the auto-enrolment scheme will be introduced in 2014 but the Government will review the introduction date depending on the prevailing economic conditions closer to the time.
