Dáil Éireann - Volume 625 - 10 October, 2006

Written Answers. - Pension Provisions.

Ms McManus asked the Minister for Social and Family Affairs his views on the recent report he received from the Pensions Board (details supplied); and if he will make a statement on the matter. [31736/06]

Mr. Timmins asked the Minister for Social and Family Affairs his Department’s efforts to improve pension coverage for part-time workers since January 2005; the rate of pension coverage for part-time workers; and if he will make a statement on the matter. [31840/06]

Mr. Timmins asked the Minister for Social and Family Affairs his Department’s targets for improving pension coverage for part-time workers; and if he will make a statement on the matter. [31841/06]

Dr. Twomey asked the Minister for Social and Family Affairs his views on the Pensions Board report on mandatory pensions; the action he will take as a result; and if he will make a statement on the matter. [31825/06]

Mr. Bruton asked the Minister for Social and Family Affairs his Department’s view regarding the lack of pension cover for many workers. [25173/06]

[172] Mr. Connolly asked the Minister for Social and Family Affairs the number of workers in the workforce that have private pensions; the extent of workers who do not have private pensions; the ratio of working males to females that are without pensions; if he has proposals to address this matter; and if he will make a statement on the matter. [32024/06]

  Mr. Brennan: I propose to take Questions Nos. 154, 156, 167, 182, 189 and 420 together.

The most recent results from the Central Statistics Office (CSO) Quarterly National Household Survey show a 0.9% point decline in supplementary pensions coverage from 52.4% of the working population aged 20-69 in quarter 1 of 2004 to 51.5% in the same quarter of 2005. The decline is within the margin of error for the survey so the position appears to be that there was little change in the rate of supplementary pensions coverage over the period in question. Workers aged 35 to 44 have the highest rate of coverage at 61.3%. The survey also shows that 43% of those in self-employment aged 20-69 have private pension cover.

Pensions coverage for women increased from 46.8% in 2004 to 47.5% in 2005. Even though the coverage rate for men fell between 2004 and 2005 from 56.3% to 54.2%, men continue to have a higher rate of coverage than women. The coverage rate for women is also below the overall average for the workforce as a whole.

The reasons for this may be quite varied and could, for instance, include issues such as the interrupted nature of many women’s working careers, the disparity in male and female earnings, which may make pensions less affordable for women, and the number of women who work reduced or part-time hours. Coverage for supplementary pensions for part-time workers can vary considerably depending on the number of hours worked. Those working less than 10 hours a week have a coverage rate of just over 9% while, of those working between 20 and 29 hours, just over 34% have a pension.

The Government is concerned about the adequacy of retirement income and has introduced a range of measures to encourage people to participate in occupational and private pension arrangements so that they can, when they retire, maintain their pre-retirement standard of living. These include Personal Retirement Savings Accounts (PRSAs), mandatory employer PRSA access where occupational schemes are not available, and an ongoing National Pensions Awareness Campaign run by The Pensions Board.

Because of the lower than average pension coverage rates for women, the National Pensions Awareness Campaign has launched a number of initiatives targeted specifically at women. These include teaming up with a recruitment company, [173] most of whose clients are women, to provide those seeking employment with a checklist of the main items that people need to address to ensure that they will have an adequate income when they retire.

This checklist was also provided to delegates at the Annual Conference of the Institute of Career Guidance Counsellors earlier this year. Other initiatives include promotional work around women’s events such as the women’s mini marathon, women’s world exhibition and information booklets dealing exclusively with women’s pensions.

The National Pensions Policy Initiative report which was published in 1998 outlines the fundamental policy on which current pension targets are based. It set a target of 70% for supplementary pensions coverage for those aged over 30 years. Pensions coverage for the key National Pensions Policy Initiative target group, those aged 30 years and over, stood at 58.6% in the 1st quarter of 2005. This coverage rate has moved little in recent years.

In early 2005, I asked the Pensions Board to undertake a review of overall pensions strategy because I considered that, on the basis of the progress being made at that time, there was little prospect of reaching our targets for pensions coverage within a of reasonable timescale. The Pensions Board completed its work in November 2005 and I published the National Pensions Review report in January 2006.

The Board has reaffirmed the various targets recommended in the original National Pensions Policy Initiative which included a retirement income, from all sources, of 50% of pre-retirement income, a social welfare pension equating to 34% of average industrial earnings and a supplementary pensions coverage rate of 70% for those aged over 30 years. The Pensions Board has recommended enhancements to the current voluntary system of supplementary pensions as it considers that it has the potential to deliver significant improvements in coverage.

However, no truly voluntary pensions system has delivered the sort of coverage rates for which we are aiming. In that context, I asked the Pensions Board to explore in more detail the issues in relation to a mandatory or quasi-mandatory system which had been set out in the National Pensions Review.

The ideas explored range from a mandatory system built on the existing private sector system to a greater role in pensions provision for the PRSI system.

In August, the Government published the Pensions Board report on mandatory pensions, Special Savings for Retirement. In this report the Board suggested a model which could be considered if it were decided that a mandatory system of supplementary pensions was required. The model was aimed at low to middle earners [174] and entails mandatory contributions of 15%, shared between employers, employees and the Exchequer, on earnings between €15,000 and €60,000. This would be backed up by an improved social welfare pension, which would increase from a current level of 33% of Gross Average Industrial Earnings to 40%. A timescale of 10 years was suggested for full implementation.

The Government has committed itself to producing a Green Paper on pensions as part of the new social partnership agreement Towards 2016 and future pensions policy will be considered in that context. The Green Paper will outline the major policy choices, the challenges in this area and the views of the social partners.

The two reports completed by the Pensions Board — the National Pensions Review and their report on mandatory pensions, Special Savings for Retirement — will be major inputs to the Green Paper. It is my intention to produce the Green Paper within months. A consultation process will then take place after which the Government will publish a framework for future pensions policy.