We are waiting with bated breath.
Pension Equality and Fairness: Motion (Resumed) [Private Members]
On this less high profile but no less important topic I wish to share time with Deputies Curran, Rabbitte, Eugene Murphy, Aindrias Moynihan and O'Loughlin.
Everyone on all sides of the House is familiar with the unfairnesses in the social welfare system, particularly regarding contributory pensions, brought about as a result of the changes in the rules on averaging. Any system whereby if one pays 520 full contributions, one may qualify for a full old age pension, but if one pays three times that - 1,560 contributions - one qualifies for something less than a full old age pension, is patently and obviously unfair. We have sought to change this. For example, I have published a Bill on the matter that I cannot move because it would place a charge of the Exchequer. However, our efforts will continue.
Numerous times, I have asked the Minister for Social Protection whether it is possible for the Department to find some way to deal with the situation of a person who chiefly starts working later in life being exempted from this averaging if he or she has paid very few stamps in previous years, for example, a student who worked during the summer holidays or someone who only worked for a small number of weeks. Even before we change the system, surely it is possible to have such people averaged from the date on which they actually started full-time work.
The motion refers to the increase in the contributions required from 260 to 520. This change was introduced side-by-side with the averaging and compounds the unfairness. First, people must get over the high fence in the shape of averaging.
Second, one has to get over Becher's Brook immediately one has surmounted that fence. The change from 260 to 520 contributions has practical consequences. I will give an example of real people, two women, in my constituency. Invariably, those affected are women - in 95% of cases. Both are from Limerick and one is a farmer's daughter while the other is a shop owner's daughter. They both worked in their respective family businesses when they left school and no contributions were paid, luckily for one of them. They got married shortly thereafter and entered the workforce later in life. One of them worked for 12 years. She had 522 contributions and 66 credits. One can amalgamate them for the purpose of calculating the rate of pension. That was an average of 49 contributions per annum over 12 years. The result is that she is entitled to a full pension of €238 per week from 7 March. The other woman worked for ten years and seven months. She paid 517 contributions and 28 credits. Therefore, on the second criterion she would have qualified. She had an average of 52 contributions per annum. Although she only paid five contributions fewer than someone who is getting the full pension she is not getting any pension whatsoever. That is unfair.
There is a difficulty with the retirement pension for people who have reached the age of 65 who have been in gainful employment all of their lives. I cast no aspersions nor do I look askance at people who draw social welfare. However, in many cases 65 year olds who have worked for 40 years or more find it mortifying to have to go into the social welfare office and sign on for jobseeker’s allowance. There is another implication as well. If the retirement pension had stayed in place a single pensioner would be €45 per week better off than someone on jobseeker's allowance so he or she is losing out. The sum of €45 per week is considerable for a pensioner. A married person claiming for a dependant incurs a loss of €70 per week, which is a very substantial loss.
I was told by the previous Minister for Public Expenditure and Reform, Deputy Brendan Howlin, that an interdepartmental committee was being set up to deal with the situation. I asked the Taoiseach on several occasions about the committee's deliberations but he kept fobbing me off. That is not an exaggeration. I have reluctantly come to the conclusion now that the interdepartmental committee was a scam because when we raised the matter in the social welfare committee last week the Minister for Social Protection told us, more or less, if I heard him correctly, that the interdepartmental committee was a waste of time. It simply analysed the problem and did not proffer any solution, but he hopes to devise a solution in the social welfare Bill which he will introduce in the first quarter of next year. I sincerely hope he will because the problem is not going away.
Two main sections of society are affected. The first is women. Let us face it, under successive Governments women in this country have been discriminated against quite a lot. We should not allow the discrimination to be perpetuated by leaving these unfair provisions on the Statute Book. The other group that is affected is the elderly. Old age is something to be enjoyed not endured. The elderly are not demographic time bombs or bed blockers, they are the people who built this country and they are entitled to live out their later years in some degree of peace, security and happiness and they should not be forced to go up to the labour exchange and sign on and show they are capable of work. The social welfare officer usually says that he or she will say nothing about that anyway. It is a case of a nod and a wink. The person is getting €45 less per week anyway so why bother.
The Government’s counter-motion does not address the core issues. We know the money has been provided for 2017 and any changes introduced would have to be addressed in the budget for 2018 unless we can get money out of the sky but we want the matter dealt with in 2017. Reading through the counter-motion I detect a lack of urgency in the Government's position on the matter. We will not support the Government’s counter-motion. In fact, we will oppose it.
With no disrespect to the Minister of State, Deputy Helen McEntee, I am disappointed that the Minister, Deputy Varadkar, is not present because I wished to pick him up on a couple of specific points he made during his contribution. He spoke about the range of pensions that are available and about Sinn Féin not paying attention or acknowledging the positive aspects of the regime. However, that was not a fair comment. It was disingenuous in response to what Deputy John Brady was trying to do. He was trying to highlight a specific anomaly that exists in respect of the State contributory pension, which primarily affects women. That is the underlying problem. It was very far into the Minister's speech before he recognised the point, but that is the fundamental issue.
It is a matter of fairness and equality. Deputy Brady was correct when he made the point that when the additional bands were introduced it adversely affected women more than anybody else. The concept of averaging is not a fair system. In other words, somebody who enters the workforce as a young person, who takes time out and does not get credits, who re-enters the workforce for the latter part of his or her career has a low average, whereas if somebody only entered the workforce at 45 years of age and worked for 20 years to the age of 65, he or she would have a high average. The averaging system is causing anomalies which are primarily affecting women who have not been able to get credits prior to 1994 and the matter must be addressed.
It is something that was raised in the budget and was discussed on Committee Stage of the Social Welfare Bill. Deputy John Brady is cognisant of the fact. It is an issue of which we will not let go. From a committee point of view next Thursday we will begin an in-depth analysis of pensions, but this area of the pensions sector in particular – the contributory State pension and averaging, which is unfair and does not lead to equality - is something we will examine in considerable detail. The issue is not going away. It is disappointing that the counter-motion tabled by the Government did not at least recognise the crux of the problem that Deputy John Brady was trying to highlight. I do not say the Government had to agree with the motion but it should have been nailed down. We discussed the issue on Committee Stage of the Bill. We have all received representations on the matter and it must be addressed. The problem was compounded by the addition of extra bands in terms of the payment rates.
I thank the Ministers of State, Deputy Helen McEntee and Deputy Seán Canney, for being present. As Deputy John Curran said, the crux of the issue has not been addressed and we must thank Sinn Féin for bringing the motion to the House. I also thank Deputy Willie O’Dea for drawing up the Fianna Fáil amendment.
I am no different to many other Deputies and I have clinics in my office on a weekly basis. Women have come before me and at first I did not understand what they were talking about. I did not think something like that could have happened, that the averaging system could have been introduced. Likewise, I found it hard to understand that it was another woman who introduced the change in 2012. It is quite shocking to think one could start working at the age of 16, take a couple of years out to rear one’s children and then go back to work until retirement age but not be entitled to a pension. In those days there were no child care facilities. If one did not have family support, one had to do it oneself. Those people thought they would be entitled to a full pension when they came to retirement age but, regrettably, the averaging system was introduced and that affected such women adversely.
It is not the amount in most cases that is at issue, it is the principle that is at stake. The problem is the denial of equality to a person's entitlement to a full pension. In most of the cases I have come across the money lost is between €18 and €23 per week. It is not €50, €60 or even €70. It seems like a small amount of money but I do not deny that over time it adds up to a lot. In many cases the women who came to me had not raised the issue previously or even spoken about it. They were mortified to bring it up. They were a little bit embarrassed. However, as more women are coming across the issue online and discussing it over a cup of coffee they are becoming quite irate. They feel rejected by the fact the Governments to which they paid their tax and PRSI through the years singled them out.
Why were they taken advantage of and why did they pull the short straw? We are talking mainly about women, but in some cases men took years out to mind a bachelor uncle. As Deputy Willie O'Dea said, some of them were far too proud to sign on. In fact, some of the ladies in question did not know they could have signed on. If they had, they would have qualified. We did not have the Internet nd great communication skills at the time and the people concerned were disenfranchised. As a female, it is regrettable that only I have a voice to represent the people who have been sidelined and feel let down. It is very important that we discuss this issue and it must be more than a discussion. Something concrete must be done in 2017. At the very least, there must be engagement about reviewing the entire process. It is disappointing that the Minister left the discussion. This sends a very negative message that he is not prepared to engage, that he is not listening and that he does not want to hear about the inequalities of the past, but we are not talking about a time ten or 20 years ago but three years ago. If it is being said we are ready for recovery, it has to be built on the efforts of those who built the State. They include the women who stayed at home to rear and educate their children when they were receiving no other support from the State. I spoke to one lady who had started work at the age of 16 years, taken a number of years out and had 1,016 credits, double the amount required, but she is still €28 short.
I thank Deputy John Brady for raising this very important issue in the Dáil. I have raised the issue of inequality in contributory pension payments time and again in the Dáil and raised it this time last year in Cork County Council because it is so troubling for so many families. I raised it last October with the Minister for Social Protection. It is unfortunate that he is not present, but the Ministers of State will convey the message to him. He said there would be a review and that there would be winners and losers but that there would be no legislation to deal with the issue next year. It needs to be dealt with now because there are no winners. Everybody, particularly those in receipt of a reduced pension, is losing out. The issue needs to be dealt with sooner rather than later.
The Government needs to deal with the situation where people, predominantly women, who are working in the home minding children or caring for elderly relatives will find themselves in receipt of a reduced pension not just this week but every week for the rest of their lives. The issue is ongoing . There is also age discrimination. Owing to the fact that this measure was introduced in 2012, people with the same number of PRSI contributions who retired after 2012 receive a lower pension than an older person with exactly the same number of PRSI contributions who retired before 2012. A moral hazard is also being created where people who paid into the system could find themselves retiring on a lower pension than somebody who made far fewer contributions or none at all in the case of non-contributory pension.
The ending of the State transition pension is another aspect of the motion and I will hone in on it very briefly because so many people have been placed in such an unsatisfactory and difficult position. They are being forced to retire at 65 years, but there will be no pension payble to them. They are being forced to sign on for a year and will, as Deputy Willie O'Dea said, receive a jobseeker's payment. They are also being forced to lie to the State by saying they are actively seeking work to receive that payment. It is a case of a lnod and a wink and away they go with their payment. We need to examine various options, including possibly writing off contributions or extending the home carer's credit. The situation where people are unequal when it comes to the contributory pension must be dealt with. It is unfair that people who have paid into the system for many years are in receipt of a reduced pension.
It must be acknowledged that the State pension is the cornerstone of pension provision in Ireland, particularly at a time when 60% of those in the private sector have no pension scheme. I commend Deputy John Brady for bringing forward the motion. It is imperative that we have a pension system that is secure, fair, sufficient, sustainable and, most of all, equitable. While pension increases are very welcome, they must also be accompanied by the reform we so badly need. The majority of people in Ireland rely on the State pension to provide a decent income in retirement. The impact of the current method of calculation on women and retired workers forced onto social welfare payments has been huge. The gender pension gap has widened in recent years to 37%. This inequality is directly related to women taking time out of paid work to care for children or family members and losing the opportunity to build enough PRSI contributions to qualify for a full contributory pension. We must ensure pension equality for women is front and centre in pension reform. There has been been ongoing discrimination against those who take time out of their careers to care for their children or elderly family members. For every week I have been in office since February, a person has come into my office to tell me of their shock on reaching their 66th birthday and realising the payment they will receive from the State will be considerably lower than what they have planned for. What is the country saying to those who take time out to care for their children, those who volunteer, those who selflessly put careers on hold and those who do the State a service, in many cases, by caring for the most vulnerable members of society who might otherwise have ended up in care? I recently spoke to one lady who was losing €30 a week because of the way the payment was calculated. Another lady started working in 1966 and had built over 80 contributions. However, only 52 can be counted. She is receiving €196 instead of €230. To add insult to injury, when the pension was increased by €3, she received €2.60. So far, it has generally been women who have been affected by this anomaly. How can we move forward to encourage having an equal place for women in the workforce when there is such open discrimination?
More 65 year olds are on the dole than people of any other age. This is because the Government abolished the transition pension while still allowing employers to get rid of older workers through mandatory retirement clauses. Action by the Government to reform the State pension system is long overdue to ensure it is fair and sustainable and enables people to age with dignity. The Minister must reform the way pensions are calculated. We must value the contributions the people concerned have made to society and ensure they will not be penalised and confined to poverty on retirement in many cases.
It is tough going in a short space of time, but Deputies are doing well. I understand Deputy Bríd Smith is sharing time with Deputy Mick Barry, if he arrives.
I welcome the motion tabled by Sinn Féin. It is timely, given the recent attacks by Mr. Denis O'Brien and Mr. Dermot Desmond on the pensions of workers in Independent News and Media. I express the solidarity of the AAA-PBP to those workers and the thousands of others whose pension benefits and rights to a decent pension are now being questioned and attacked as unrealistic. I note the counter motion tabled by the Government and must say how pathetic it is. It is part of a wider narrative to place the issue of pensions in a certain light. We are told that because people are living longer, it is a problem, not something to be celebrated. We can only fund pensions from a fixed pot of money. That is a problem. If we increase payments in one category, it means that we must cut payments for some other category. That is a problem.
According to the Government, that the poverty rate among pensioners is lower than other groups is a problem. This might partially explain its heroic efforts in the recent past to increase the poverty levels of pensioners. The very idea of a decent pension after someone's working life is seen as a threat to the economy and is no longer realistic, except, of course, for people in this House and in particular for Ministers.
While Fianna Fáil and Fine Gael were congratulating themselves on giving pensioners an extra fiver a week, the actual policy of this Government and previous ones has been to undermine, cut and reduce the entitlements of workers to a State pension and to force them to work longer. When I raised the issue with the Minister, Deputy Varadkar, he suggested the policy on changing the bands for a contributory pension was motivated by a desire to be fair to those who had worked longer. Like most of what Minsters say on any of these issues, it is totally disingenuous.
My amendment to the Social Welfare Bill on this issue was ruled out of order. We could have made changes without having to continually battle on this issue, but it was ruled out of order by the Minister.
The purpose of those changes was to save the State costs. The State is very keen to make savings at the expense of workers but still bails out bankers to the tune of more than €8 billion a year plus interest and refuses tax due from Apple. By changing these bands the State will save €50 million in 2017 and €10 million in each subsequent year. By scrapping the transition pension, the State saves €75 million to €80 million a year. By increasing the paid contributions needed for a contributory pension to €520 the State saves €6 million a year, which is a nice bit of piggybank pocketing.
Of course, as the years goes by and workers have to work until 68, more millions will be saved by the State. This money is taken from the pockets of pensioners. It will not be used to fund other essential services despite the self-serving platitudes of various Ministers because there is still a huge shortage in hospitals, education, special needs, etc.; it is not filling a hole.
Regarding the "problem" of people living longer, what is often missed in this debate is that workers living longer than the past generations are fully paid for in financial terms because in recent decades Irish workers have become increasingly productive, based on the statistics. It is entirely possible to maintain and improve the pension entitlements of workers who are living longer, but we cannot do it if we continue to widen the inequality in the share of national wealth going to workers in terms of wages and pensions compared with the share going to the wealthy in capital and profits. That goes to the core of the so-called crisis in our pensions. It is not the greater longevity of the workforce or the people, or trying to balance different groups' interests, but the fact that a greater and greater share of the national wealth goes to the wealthy rather than to social services or to workers' wages. That is what is happening. It is very clear from the way Independent News and Media treated its workers and pensioners. What is happening at State level is reflected throughout the workforce.
I again mention the €3 billion we are rejecting from Apple and the countless billions we are refusing to take in taxes from REITs, multinational corporations, the hospitality sector and from the load of wealth that exists in this country. This is the root cause of the crisis in pensions.
This debate is timely, in a week in which the shareholders of Independent News and Media sanctioned a smash and grab of their workers' pensions in order to improve the financial position of Denis O'Brien and Dermot Desmond. These are two people who do not by any stretch of the imagination need more money. It is timely that we set out a rejection of the logic of a State that thinks forcing working people to work longer for less and discriminating against workers is a just cause or makes economic sense.
I wish to outline the one peculiar and outrageous example of how the State thinks discrimination against women is acceptable, which goes to the heart of this motion. Some months ago when dealing with a constituent I was amazed to discover that the State believes that it is acceptable to discriminate against women, because it is overwhelmingly women who raised families in this country before 1994. The State made the adjustment to take into account the homemakers after 1994 and to penalise those who made their home before 1994.
We have legislation that recognises that workers may take time off from the workforce to raise families. While the State will take those years into consideration when calculating their contributory pension, it will not do this for women who raised families before 1994, which is ridiculous. It is discrimination on a gender basis and on an age basis. Many women, who recently retired and who raised families in the decades of the 1960s, 1970s and 1980s, in an era when women generally began their families much younger, suffered greatly in this State under a range of headings and now find their expected contributory pension has been reduced, often by as much as €30 a week. This is insulting and hurtful, and must end.
I do not accept the argument that if we correct this discrimination we must hit some other vulnerable group. This is nonsense to mask the State's contempt for these women and to try to justify the taking of €30 a week from women who worked for decades and paid their contributions to the State.
The revealing aspect of this debate is that the State is willing to legislate to discriminate and take money from some of the most powerless groups in our society at a key stage of their life. Let us compare it with the lethargy and slowness to legislate for rent controls or to deal with corporate fraud. There is a stark contrast in how we deal with one group as against the other.
I welcome the debate and, of course, we support the motion. This is not the end of the issue. It will require campaigning, people power and political pressure to put an end to this blatant discrimination.
Deputies Joan Collins, Clare Daly and Broughan are sharing eight minutes.
One of the most regressive measures introduced by the last Government was the 2012 pension cuts, which disadvantaged tens of thousands of women who had taken a hiatus in their working lives. To put this in context, two thirds of those in the bottom two contribution bands are women, and they experienced losses of more than €1,000 per year to pensions that were already low. These penalties undervalue the crucial work women do in Irish society, not only in the workplace but also in social reproduction and the care work that is often unpaid but is absolutely essential to the fabric of society. Women should not be penalised for these essential contributions to our society. These reforms were also blind to the reality of working life in modern Ireland, where more and more people identify as underemployed, being in precarious work and often out of work for significant periods.
I want to respond to the argument, made by people like the Minister, Deputy Varadkar, that Ireland cannot afford to provide good pensions at 65 to all who need them, or that it would mean cutting elsewhere. This is a trick deployed by right-wing politicians to pit every campaign for justice and equality in this country against other people looking for a decent standard of living. It chimes with their efforts to create a free-market society - one where all of us compete against each other day in, day out for the crumbs off the table while a tiny number of people walk off with the cake.
The truth - I believe the people know this - is that there are many people with a lot who pay far too little in tax, and whose tax dodging is paid for by the rest of us. For example, businesses in Ireland pay less than half the European average in PRSI. In complete contrast with elsewhere in Europe, personal taxes on working people raise three times as much as their employers' PRSI.
In response to a parliamentary question, the Minister provided me with figures, showing that a 2% increase in the rate of employers' PRSI would yield an enormous €1.3 billion per year. It is ironic that it was the former Tánaiste and Labour Party leader, Deputy Burton, who introduced these pension cuts. Today a former Labour Party Senator, who is now working as a lobbyist in Retail Excellence Ireland, has stated that one of her tasks is to reduce employers' PRSI. It seems that those who cut then make sure that we cannot get any benefit from them. The money is available to give every elderly person in the State a decent pension, to ensure people can retire at a humane age and to reverse the discriminatory penalties against women but the Government has made a political choice not to do so.
I am delighted to have the opportunity to speak briefly to this important motion on pension equality and fairness. I commend my Sinn Féin colleagues for raising the matter in the House. It is one I have raised many times as it affects a great many of my constituents in Dublin Bay North, especially women. It has been brought to my attention consistently during the years.
I welcome the point made by Sinn Féin in the motion about developing the Social Insurance Fund to provide for a universal pension payment for all men and women. We know that the gender pension gap is now 37% and that just 16% of women are in receipt of the full State contributory pension. This proves that the time women take out of the workforce to care for children is not valued equally by the State. I have previously asked the Minister how much money full-time carers save the State as they are simply not valued and rewarded sufficiently for providing that care. They are further disadvantaged when they reach retirement age. The homemaker scheme was introduced in 1994 to try to address the most blatant inequalities but it did not work in bringing about equality for women. The Minister has informed me that the estimated cost of backdating the scheme to 1973 is €150 million, or €160 million if backdated to 1953. The State must take full responsibility for the imposition of the marriage bar for so long.
I fully support the National Women’s Council of Ireland in its call, made last week to the Committee on Budgetary Oversight, for the introduction of a universal pension payment. I fully support the calls made in the motion for pension rates and bands to be restored to their pre-September 2012 levels and for the reduction of the number of contributions required from 520 to 260, the number in 2012. I also agree that the State transition pension should be reinstated. The National Women’s Council of Ireland made a submission during the public consultation phase on the universal supplementary retirement savings scheme in June 2015.
I warmly welcome the motion which I commend to the House.
I was absolutely delighted when Sinn Féin selected this topic and recognised as an absolute priority the ending of the discrimination experienced by women in the pension system. The Government does not seem to recognise it as a priority. It would be wrong not to mention the atrocious treatment of pensioners under defined benefit schemes, including the Irish airlines (general employees) superannuation scheme, IASS; the Central Remedial Clinic, CRC, scheme and the Independent News and Media, INM, scheme. It must be addressed by way of fundamental legislative change, not by piecemeal measures, in order that solvent employers will not be allowed to walk away. It is interesting that the Minister has asked the Attorney General if she could intervene in the INM case. Clearly, he want to keep journalists sweet as he did not share the same concern or want to intervene in the CRC case, in which the issues were very similar.
Other Deputies have spoken about the fundamental unfairness for women who have hundreds more than the 520 PRSI contributions needed but who still do not qualify for a full contributory pension because of the ridiculous averaging system used. It is so bad that one would almost be forgiven for wondering if the system had been designed deliberately to have that impact. I will not reiterate the points made by other Deputies, but I shall point to the response one woman received from the Minister when she wrote about the fact that she was in receipt of a fraction of her full contributory pension because she had left work to raise her children. The Minister wrote to her and said:
When it comes to the view that this represents discrimination against women, it is worth being aware that ... it is a fact that women generally get more back from their PRSI contributions than men. This is particularly true for women with lower earnings and shorter contribution years, even though they may pay the same PRSI rate as men.
To me, that is an absolutely contemptuous indicator of how much the Department devalues the work women do in the home and in rearing children. She was told she was lucky to be in receipt of half of the pension paid to her male counterparts, despite the fact she had spent all of her adult life working. It is unbelievable.
I want to finish by reading an email from the husband of a woman living in my area. She is set to lose out on a full contributory pension because she was forced to leave the workplace when she got married. He puts it well in one or two lines:
My wife will qualify for the State contributory pension in October 2017 but will only receive about 84%. This is because she raised three children whose taxes are now being used to fund the State. It seems somewhat ironic that the State is now reaping the benefits of my wife's decision to be a stay at home mother while at the same time the State is punishing her for doing so.
Before I call the next speaker, I know that there was criticism of the Minister, Deputy Leo Varadkar, for not being in the Chamber for the debate. In fairness, he asked to speak prior to 5 p.m. and has had to leave to fly to Brussels to attend a meeting. I want to be fair and straight. He has left behind a very capable Minister of State to handle issues. The Minister is not out of the Chamber because he wants to be but because he had to catch a flight to Brussels. I just wanted to clarify the position.
I note that Air Force One which President-elect Trump does not want to use has all kinds of communications systems on board. Perhaps the Minister might be able to listen to debates while in the air if we get the Air Corps to upgrade the Government jet.
I welcome the motion and certainly support its intent. I am not sure, however, if it really deals with many of the major issues that will affect those who will reach pension age in the coming years and find that they either have no entitlement to a pension or are only entitled to a reduced pension at best. Far too often, we meet people who are reaching pension age and worried about what will happen once they hit the age of 65 years. Many people are being forced to retire at 65 years and sign on for jobseeker's benefit, which is totally farcical. People who have always wanted to work are being forced to go to a labour exchange, which is absolutely ridiculous. While I understand people are living and working longer, something must be done to support those who are being forced to retire at 65 years of age. It is unacceptable to force pensioners to sign on to receive jobseeker's benefit having worked their entire lives. I also support the call for the State transition pension to be reinstated. It is a problem that the Bill does not indicate what the cost might be.
There is also a problem with yearly averaging of contributions. While I understand the nature of the call made to have the number of contributions required reduced from 520 to 260, I do not believe this is the real problem. It would do very little in dealing with it. The real problem is the yearly averaging of contributions. In this day and age, very few people will have a difficulty in reaching the 520 contributions required to qualify for the State pension as ten years of full employment is sufficient to reach that number. In the past, many women were forced to leave the workforce when they got married or chose to care for their children in the home, a decision which was commendable, but they were subsequently penalised for doing so. In the next ten to 15 years, many women will discover on reaching pension age that they will not be entitled to a pension at the maximum rate despite potentially having worked for over 30 years. This is a terrible anomaly. I acknowledge that the Government has introduced the homemakers scheme to try to cover those who chose to care for their children in the home, but the scheme does not include those who cared for their children before 1994, which is hugely discriminatory. It also only covers the care of children under the age of 12 years. We all know that rearing children between the ages of 11 and 20 years is probably the hardest and it is also the most expensive period. I am unclear as to the success of the scheme and know that there are many people who cannot avail of it and who will now struggle to receive a full contributory pension.
I have two examples to highlight the unfairness of the system. Let us consider the case of a woman, or a man, who started work at the age of 17 years and then took 16 years out of the workforce to raise her or his children before returning and continuing to work until she or he reached pension age. The person concerned will have accumulated the 520 contributions required without any difficulty but because of the 16-year gap in his or her employment record, he or she will only receive a pension at a much reduced rate as he or she could have a yearly average of just 19, which would mean his or her pension payment would be reduced by €81, which is disgraceful. I ask the Minister of State to take this on board. Despite having worked for over 30 years, he or she could potentially only be entitled to a pension of €152 per week. This is an actual case with which I am dealing.
At the same time, somebody who comes to live in Ireland at the age of 55 and works for ten years prior to reaching pension age will have no difficulty obtaining the 520 contributions and could potentially have a maximum yearly average of 48, thereby being entitled to a maximum rate pension of €230. There is a clear anomaly which needs to be checked.
Despite the fact the people in my first example could have worked for 30 years in Ireland, they have a reduced rate pension but a person who only works for ten years before pension age could potentially have a maximum rate pension. There is an inherent unfairness in this situation, which is clear to anybody. Reducing the contributions is not the answer if we do not examine the workings of the yearly average. I do not believe reducing the contributions from 520 to 260 will do anything for these people. Instead, the focus should be on examining the yearly average, which is the problem, and how this affects people receiving their pensions.
There are many reasons people could have a break in their records. For example, if someone entered the workforce at 17 but decided to take a number of years out to return to full-time education, which happens very often now, thankfully, and subsequently went travelling, that is a break. If people lose their jobs and are not entitled to a jobseeker's allowance payment because their partner is working and they cannot sign for credits, that is a break. If people emigrated for a number of years during the recession, as so many had to, and then returned home, when they come to apply for a pension, they will find that they will not be entitled to the maximum rate pension because of the gap in their record. This is very unfair. It is the yearly average that causes the greatest problems in my estimation and in that of my office staff and I believe these issues need to be re-examined very closely and very quickly.
The other issue is the way in which the non-contributory State pension is assessed. The qualifying income thresholds for the non-contributory State pension have not been increased in more than ten years and many people find they have no entitlement to a pension because of the income of their spouse or partner. It is time for an increase in this regard. I also have major concerns about the manner in which earnings are assessed. Any cash income is assessed in the means test but earnings of up to €200 per week from employment are disregarded. This is not the case for self-employed people or farmers and every penny earned by self-employed people or farmers is taken into account. This is very unfair and discriminatory.
It is time for significant pension reform. When I speak about reform I do not just mean increasing the pension age, as the Government intends to do. I do not agree with this. We must ensure fairness and equality and there are many examples of a lack of fairness in our current system. The fact there are more 65 year olds on the dole than any other age is an insult to our retired pensioners and we must examine the reasons. This cannot be ignored. We know they are not ever going to gain employment, unfortunately, because of their age. Those over 50 constantly report how difficult it is to gain meaningful employment so we cannot pretend that very many 65 year olds are easily going to gain employment after being forced to retire and they should not be put in this situation. It is ludicrous to force them to go to the labour exchange, a place they never visited and they do not know where it is. I am not demeaning anybody who goes there but they never went there. They always worked hard and it is totally unfair. People suffer greatly because of it. They are intimidated by it. It makes many people mentally and physically sick because they never went there and they do not want to have to go there. It is unfair to put them in this trap for 12 months.
Many women will not receive a full State contributory pension. The fact that only 16% of those receiving a full State contributory pension are women is a shocking indictment of a system that penalises women who took time out to care for their families. We should reflect on this. The system has to be reformed and has to be looked at retrospectively so that those who cared for their children before 1994 are not the biggest losers, which they are at present. This is very discriminatory.
I will share time with Deputies Healy, Donnelly and Ryan.
The Social Democrats are very happy to support the motion on pension provision, particularly with regard to the State pension. It is true to say pensions need urgent attention and there needs to be very clear policy in the area and a roadmap set out for the future. There is much uncertainty about the pensions situation at present, whether with regard to the changes to the State pension we have seen in recent years or private pension provision. We need direction and leadership from the Government in this regard. If we take the fact approximately €3 billion is spent every year on providing tax relief to people who put away money for their pensions, we know 80% of it goes to people earning at the top rate of tax. To some extent we must bear in mind the people subsidising this are people on low incomes who, perhaps, have no pension provision themselves. This creates an unfair situation whereby we allow people to put away very big pension pots which benefit from tax relief and at the same time, for the same amount of money, we pay the State pension.
The State pension must become the mainstay of pension policy and must be linked to the consumer price index in terms of increases but should reflect a percentage of the average income. We need to move to having certainty on the level of State pension. It is also important there is confidence in the State pension and that the rules will not change so that people who pay into it over their lifetime will not be hit with a rule change which negatively impacts on them. This happened when the number of contributions required for a full State pension was increased. This impacted in particular on women who had taken time out of the workforce. There should not be midstream changing of the rules. There should be recognition for time out of the workforce for child minding or other care responsibilities. This should be reflected in the requirements for the number of contributions.
Another point is with regard to people who are no longer entitled to the State pension or transition pension at 65, and who are told they must wait until 66 even though they are required to retire at 65. We need to change the law in terms of contracts so people can stay beyond 65. We also need to stop the situation, which is so insulting to people who perhaps have worked for 40 years, whereby they must, at 65 years of age, go on jobseeker's payment. It is entirely unacceptable and should not have been allowed.
Another issue is the extension of the pension age. We need a transition pension system until the retirement age catches up with the pension age. A range of issues need urgent political attention and have not received any attention. We had the green paper a number of years ago, but very little progress has been made on it. I welcome the motion in so far as it goes, and the Social Democrats are happy to support it, but much more needs to be done.
I welcome the Private Members' motion and commend Deputy Brady on bringing it forward. It is a very important motion which requires urgent action on the State pension and private pensions. The changes in recent years to the State pension have clearly impacted negatively and disproportionately on women and has also forced retiring workers onto jobseeker's payment because of the abolition of the State pension transition. It is instructive that during this debate we have not heard from the Labour Party, which introduced the various changes that have impacted negatively on pensioners. It is instructive it has not taken the opportunity to speak on the motion.
The question of how women have been impacted by the State pension is raised on a regular basis. At my clinics I receive regular requests from women with regard to this area. It is a question that needs to be addressed formally, quickly and urgently. We have effective discrimination against women who chose to remain at home for a period of time to look after and rear their families.
Another area is State pension transition, which has been abolished, forcing workers to retire aged 65 while not qualifying for a pension until they are aged 66. They are forced onto jobseeker's allowance for the interim 12 months and that is going to get worse in future years because the State pension age will increase to 68 and then to 70 over a period of time. Those two areas need to be addressed urgently.
I welcome the motion and recognise the work of Deputy John Brady in bringing it before the House. I will certainly support it. The State pension system is clearly broken and lacks transparency. Departmental officials are now not allowed to tell people coming up to pension age what pension they are likely to get from the State. It also lacks fairness as some people might work for ten years and pay a fraction of the contributions others pay but get full payments, over and above those who have contributed a lot more but in a less linear fashion.
As has been said repeatedly tonight, it is also deeply discriminatory towards women. We know that, on average, women get 40% less in retirement than men. Why is this? There are lots of reasons, among them the fact that the current system does not properly account for periodic work, it does not account for the many years spent raising children and it does not properly account for people who are self-employed. I had a case last week of a woman who worked for three months after college. She stopped working, raised kids for many years, went back to work and worked up to retirement but is being hammered for the years when she was raising her children. In a committee meeting last week, the National Women's Council identified pensions as the single biggest issue they are contacted about. This is not only important; it is also mainstream and is not in any way a marginal issue.
We need to create a system which is designed not for PAYE men but for everybody, including the self-employed, parents and women. We need targeted measures for those women who find themselves penalised by the system right now. We need to transition immediately to an open, transparent system where people can see what they are going to be entitled to, can contribute more and are not penalised for doing many of the things one has to do in life other than pay PRSI stamps every week.
The Sinn Féin Deputies will share ten minutes.
I commend Teachta Brady for tabling this motion. In Sinn Féin's alternative budget this year, which was fully costed, Deputy Brady made sure these issues were included. It shows that these things can be done and the money is there to do it if we make the right choices. The Government could have done this in Budget 2017 in all the areas the Deputy has raised but it refused to do so. The Minister and every Teachta Dála in this House know that austerity has deeply and disproportionately affected women. This is a fact which is backed up by all the reports that have been done by independent groups which have analysed budget after budget since 2009.
This is not by accident either; it is by design. Care work is highly gendered and leads women to put family needs before their own by taking themselves out of full-time employment and a normal career path which is, in fact, highly gender-biased towards men. The fact that women in general take care and social support roles in our society means that when the State supports in these areas are cut, it is women who are expected to take up the slack. When women leave full-time employment or turn down a promotion because of family commitments, this affects the credits they are able to build up, with knock-on effects for their pension entitlements. Instead of acknowledging this the Government actually reinforces this inequality through legislation and pension rules.
We still have not heard what Fianna Fáil is going to do, although it has tabled an amendment as it always does. It rarely supports sensible, realistic and costed proposals brought forward by Sinn Féin and the last time Fianna Fáil was in power, it slashed social supports while putting over €20 billion into Anglo Irish Bank and Irish Nationwide Building Society. The effects of that decision are still with us today. The crisis was caused by a cosy cartel of bankers, developers and politicians but it was low-income to middle-income households, lone parents, and many, mainly female, low-paid public and private sector workers who were made to pay for the mess. Those who were not able to defend themselves at the time were made the key targets of Fianna Fáil and Fine Gael when it came to picking up the pieces.
I commend the motion to the House and hope that Fianna Fáil and the other so-called Opposition Members of this Dáil support the motion.
I have spent the vast majority of my working life defending workers and their rights and I came in here to continue that work. That is why I believe this motion is so important. The impact of the gender pay gap is felt by women at every single level in society and most acutely by the cohort of women that will face retirement in the very near future. I appreciate that there are people in this House who believe the gender pay gap is the fault of women themselves for not wearing the right gúna. I believe they call it "dressing for success" but the gender pay gap should be addressed by direct action from the Government and this House.
I will tell a story about a man who, to protect his identity and his dignity, I will call "Paul". I had the honour of presenting him with a badge to mark 50 years' membership of the trade union for which I worked. On retirement at the age of 65 he had to go to the place he referred to as the "labour exchange". He told me he was not on the dole but had retired after 50 years of working. When the Minister for Social Protection, Deputy Leo Varadkar, was here earlier he tried to give us a lecture about what pensions were and how they operated but I will take no lecture from the Minister or anybody else about how pensions operate because I know, and so does Paul. His was an integrated pension and he had to go onto the dole. After 50 years of working, that man had retired and was not unemployed. He had finished working and had finished paying tax in the days when, as my mother used to say, "tax was tax". He paid every shilling he was supposed to pay and, God love him, he was also an activist in the Labour Party. He asked me, "Can we not contact the Labour Party and see what it can do?" I said, "No, it was the Labour Party and its very best friends in Fine Gael who did this to you". It gave me no pleasure to say that to him. People are entitled to the dignity of a decent retirement after 50 years of working so I urge Deputies, in particular those who think we can address the gender pay gap by dressing a bit more smartly, to support this motion. It is important and enjoys the support of the Irish Congress of Trade Unions and the broad trade union movement, for all the reasons I have outlined.
By any standard this motion is very straightforward. It calls for the reinstatement of transitional State pension, the restoration of pre-September 2012 pension rights and a reduction in the number of contributions required to qualify for State pension, from 520 to 260. All these things are important and need to happen but central to all of it is the notion of pension and labour market equality for women. In a 2007 report, Pensions - What Women Want, the National Women's Council of Ireland repeatedly emphasised the need to engender the Irish pension debate. Gender, class and race are now recognised as the three main organising categories in society. We also know that these categories overlap and cut across each other to produce inequality, poverty, power and privilege. We see this very graphically in the ongoing pensions debacle where, as a result of a policy decision taken in 2012 by a Labour Party Minister, thousands of women are now actively discriminated against on the basis of their gender.
Deputy Burton's 2012 policy was, in essence, both gender and class blind. For example, it failed to take into account the fact that, for most women, childbirth, caring and homemaking take up huge parts of their adult lives and also require them to move into and out of the labour market. In hindsight, the 2012 changes to the State pension regime resembled something from another era when women's work inside the home was rendered invisible and of less value than participation in a male-dominated labour market. The recommendations in the Sinn Féin Private Members' motion seek, as a first step, to address this inequality.
At the very least, such changes, if adopted, would not only be beneficial for women but would also form part of an anti-poverty strategy in that they are also beneficial to the many low-income groups which experience cumulative labour market disadvantage and a subsequent high risk of poverty in old age.
The report from the Low Pay Commission on the over concentration of women in precarious work, which means low pay, uncertain hours and exploitation, is before the Cabinet. I urge the Minister of State to recognise the link between the structure of the labour market, the social welfare regime and the feminisation of poverty.
Gabhaim buíochas le mo chomhghleacaí, an Teachta John Brady, as ucht an tairiscint seo a chur chun cinn sa Dáil seo. De gnáth, bíonn mearbhall ar dhaoine nuair a smaoineann siad ar an ábhar seo agus ar na leasuithe, mar dhea, a rinneadh ar an bpinsean. Bíonn ceisteanna ag cuid de na cuairteoirí ormsa i m'oifig Dáilcheantair ar cibé atá le déanamh acu. Bíonn siad díchreidmheach faoin méid atá tar éis titim amach. De gnáth, síleann siad gurb ionann reform agus rud maith, ach ní mar a shíltear a bítear. Tá a fhios againn sa chás seo cad atá tar éis titim amach agus gur bhrúigh Fine Gael agus Páirtí an Lucht Oibre na leasuithe uafásacha seo tríd an Dáil in 2012. Ní raibh an reachtaíocht chuí ann chun tacú leis na leasuithe seo agus anois tá gá do dhaoine atá tar éis a shaolta ar fad a chaitheamh ag obair dul ar an dól nuair a éiríonn siad as a bpoist. Tá sé sin scannalach agus náireach.
De bharr drochpholasaí an Rialtais seo, tá gá do na seanóirí seo dul tríd limbo díreach roimh ré órga a saolta. Luafaidh mé cúpla cás mar tagann go leor daoine chugam mar gheall air seo. Tháinig toghthóir amháin - glaofaidh mé Brian air - isteach san oifig cúpla seachtain ó shin. Bhí sé ag dul as a mheabhair. Dúirt a fhostóir go raibh air éirí as a phost nuair a bhaineann sé 65 bliana d'aois amach. Ó bhí sé ina dhéagóir, chaith Brian a shaol ar fad ag obair. Bhí se ag iarraidh an tréimhse oibre a leathnú ach níor ligeadh leis. Is féidir le fostóirí aois éiginnte a bheith acu sna conarthaí fostaíochta. Sin mar atá sé leagtha amach sa dlí agus is éagóir iomlán é sin.
Tá an cás níos measa do mhná. Tháinig bean a bhí ag obair ó bhí sí 14 bliana d'aois isteach chugam cúpla seachtain ó shin. Tá 65 bliana bainte amach aici anois ach níl sí in ann an pinsean a tharraingt. Agus cén fáth? Agus an Rialtas ag oibriú amach na cearta atá ag duine, ní chuirtear san áireamh na blianta oibre atá ag duine ó bhí sé nó sí 14, 15 agus 16 bliana d'aois. Ar son mhná na hÉireann agus ar son iadsan atá 65 bliana d'aois, impím ar an Aire é seo a leasú go tapaidh.
I am taking this on behalf of the Minister for Social Protection, Deputy Varadkar, who is not here because he had to go to Brussels, not because he does not want to engage. A wide range of pension issues were raised in the debate and they involve different potential policy responses. I intend to focus on the issues outlined in the motion, which were the main focus of the debate.
Everybody's key objective is to ensure pensions are sustainable and of value into the future. As has been stated, the cost of pensions has increased by over 60% in the past decade in real terms. We are a growing and ageing population and any insinuation that we see this as a burden on society is unfair. As Minister of State with responsibility for older people, I think we value older people more than ever and we can grow from the knowledge they bring to us. The ratio of workers to pensioners will halve in the coming decades and the Opposition Deputies must acknowledge this. While we will continue to increase the rate of the State pension to improve its adequacy, this cannot be achieved without reforms that will also ensure its adequacy. A failure to do so would make the financing of pensions an even larger burden on already hard-pressed workers. Very few people are looking to increase the rate of PRSI or taxes they pay yet that is what would be involved in reversing the reforms listed in the Opposition motion. I see no other funding proposals to match what is being sought this evening.
A person who has not made many contributions to the Social Insurance Fund will be supported by the system through the State non-contributory pension, which is 95% of the maximum contributory pension depending on his or her household means, or in the increase for qualified adults payment of 90%, which is based totally on his or her own means. This means for a couple, of whom only one spouse has a full PRSI record and contributory pension, the total income will be at least 195% of a full contributory pension. If they receive less than this in the State pension payments, it is because their total income, including State pensions and other means is greater than 195% and very likely more than the value of two maximum rate contributory pensions. While this does not make them rich by any means, it makes them among the better off of those aged over 65. People aged over 65 are far less likely to be in poverty than the workers who fund the State pension.
Approximately half of those of pension age rely solely on the State pension, and over 70% of those in receipt of the non-contributory pension qualify at the full rate and over 80% of those in receipt of the increase for a qualified adult, IQA, qualify for the full rate. Where people qualify for only a reduced rate of non-contributory pension or the IQA, it is because they have significant other income and will, generally, have a higher total income than half of the pensioner population who rely on the State pension.
We have a contributory pension system funded on a pay-as-you-go basis. Anybody who has not paid into the system to a great extent will still receive a pension if he or she needs it. The changes made in recent years have the cental objective of making the system sustainable, and failure to protect pension provisions into the future would hurt those most in need, many of whom depend solely on State pensions. It would be particularly unfair to today's workers, half of whom are working women who have to pay for child care and mortgages, to expect them to pay more and more into a pension system that, as has already been pointed out, would be broken by the time they reach the age at which they will depend on it.
There are issues with pensions, particularly with people being made retire before pension age. No simple solutions are in the Opposition motion and there is no pot of gold to deal with the issues. Even with the reforms attacked by the motion, the cost of pensions is increasing at over 60% per decade in real terms and only so many years of such growth can be managed before it all collapses. There is a danger of unintended consequences and, therefore, a need for a thorough debate and consultation on any proposed changes. I am glad to hear the total contributions approach will have a consultative process that will allow the various stakeholders to set out their priorities. Having the process ahead of the introduction of legislation will result in more balanced legislation being introduced and a better informed and more genuine debate in the Oireachtas when it is brought before us.
Pensions reform impacts not only on what happens now but on the outcomes for people in decades to come. The total contributions approach reform is a great example. It was announced in 2010 but was deliberately and rightly scheduled for 2020 by the Government of the time. The Government recognised that PRSI had been extended to the self-employed only two decades earlier and that postponing it to 2020 would allow people the opportunity to build up the required contributions. This Government may or may not be the one to introduce the legislation. It will depend on goodwill on both sides of the House to pass it. I can think of few issues on which cross-party consensus is more appropriate. Pension reforms are long-term projects and failure to make the right choices now will impact greatly on the choices of future Governments. It is in the interests of everybody that we have a sustainable pension system which provides a decent income to our older people if they need it or if they have contributed to it. As the Minister outlined previously, there has been significant restructuring of pension systems in other countries to meet the rising costs of pensions. The UK's new state pension is more than a quarter lower than our State pension.
As a young woman who has met many women in my office and many organisations as Minister of State with responsibility for older people, I agree pension equality for women must be addressed and it will be. The Minister, Deputy Varadkar, is working on proposals to replace the current yearly average approach to State pensions with a total contributions approach, which will provide a fairer basis for the calculation of contributory pensions as well as removing anomalies. The issue of the age of retirement and people having the opportunity to stay in their employment beyond set retirement terms in many employment contracts is raised with me regularly as Minister of State with responsibility for older people. The issue has been brought to all our attention. The interdepartmental group on fuller working lives chaired by the Department of Public Expenditure and Reform recognises that mandatory retirement ages can compel employees to leave employment even though they may be fully able to contribute to work and would otherwise like to remain in the workplace.
I can think of many people in that position.
Deputies also mentioned the difference in the amount received and the fact that people often have to seek support which they never had to do before. This clearly goes beyond social protection legislation and, as Minister of State at the Department of Health, I note that it clearly goes beyond my Department's legislation too. The Minister for Social Protection and I have spoken to the Minister for Public Expenditure and Reform on this matter and the point that the largest employer in the country is the State has been made. Thought has been given to what can be done to make progress in the area. It is not, however, something that can be resolved through these proposals. It would be dishonest to pretend it could. The Government is very conscious of the issues that have been raised here tonight. I hope Deputies understand why some of these changes were made and the costs that would be involved in reversing them.
I intend to focus on the issue of gender and women in regard to the motion. I commend Deputies John Brady and Denise Mitchell for bringing it forward. As a woman, the issue of the shocking pension gap in the State really stands out. It is also a critical issue for many women in my constituency. Many Members have brought up the point about people calling into their offices. Many of these women feel they are being discriminated against for having had to care for either their children or relatives. The reality is that women generally take up this role and I agree with them 100% in regard to their feelings of being discriminated against. On a very basic level, one has to look at the cost of child care in the State and how it impacts on women's capacity to remain in the workforce. We live in a society where the cost of child care can be the cost of a second mortgage. For parents with several children, the cost is completely out of reach. Understandably, a parent, generally the woman, leaves her job to become the primary caregiver. Often, women do not leave work fully but become part-time. Many of those women do not realise the impact this will have on them later in respect of their pensions. It is only when they come to pensionable age that they realise that because they reduced their hours or took parental leave, their pension contributions will not be equivalent to those of a man. The reality is that these women will have reduced pensions on retirement. The gender pension gap in the State is 37%, which is fifth highest in the whole of the EU. Only 18% of those receiving the full contributory pension here are women, which is appalling. It shows how many women do not qualify and that, in turn, shows that there is something very wrong with our system.
The motion is an effort to correct the reforms in 2012 which hit women very unfairly. It is bad enough that the gender pay gap is around 14% but to think that the pension pay gap is knocking on the door of 40% is unbelievable. Women who have worked their whole lives and, indeed, those who are still working deserve fair and appropriate provision for later in life. Women contribute an enormous amount to the workforce and wider society and it is pitiful that we have come to a stage where we feel we have to fight for basic equality on pension rights, often after a lifetime of commitment to employment. In many cases where women give up their jobs to raise children for a period or to look after an elderly parent or relative, they are saving the State money. Nevertheless, they are met with the assertion that they do not have the full contributions for a pension, which is scandalous. I urge Deputies to support the motion.
I am not surprised that Fine Gael is not going to support the motion because it is not in touch with the ordinary people out there who rely on the contributory pension we are discussing or with the grave inequalities that have been brought about. It is noticeable that the Labour Party Members who introduced these pension reforms back in 2012 have not even appeared in the Chamber nor, indeed, participated in the debate. The motion will be voted on tomorrow in the Chamber. There was a great deal of talk, in particular from Fianna Fáil, and it is also noticeable that there is something absent from the amendment the party tabled. Fianna Fáil has spoken a great deal about the 37% gender gap. It spoke about it yesterday in the Seanad and has referred to it time and again. Yet, the amendment it has brought forward to the Sinn Féin motion does not address the issue at all.
Sinn Féin has provided funding in our pre-budget submission, which was fully costed by the Department. It provided €50 million to reintroduce the State transition pension and also €78 million to bring back the bands to the 2012 levels. If we are serious about ending the injustices about which many Members have spoken, now is the opportune time to do so. I urge all Members to do it.
I thank all those Deputies who have co-signed the motion. Many of them referred to the number of people coming through their constituency offices on a daily and weekly basis and the difficulties that face 65-year olds who have worked for 50 years and more in some cases only to be told they have to sign on for jobseeker's payments. It is wrong, unfair and inequitable and I urge all parties to unite behind the motion and support it.
In accordance with Standing Order 70(2), the division is postponed until the weekly division time on Thursday, 8 December 2016.