Select Committee on Social Protection, Community and Rural Development and the Islands debate -
Wednesday, 29 Nov 2023

Social Welfare (Miscellaneous Provisions) Bill 2023: Committee Stage

An Leas-Chathaoirleach

Apologies have been received from the Cathaoirleach, Deputy Denis Naughten. Members participating remotely may do so only from within the Leinster House complex. I remind all those in attendance to make sure their mobile phones are switched off or in silent mode.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person or entity outside the Houses or an official either by name or in such a way as to make him, her or it identifiable.

The purpose of this meeting is to consider the Social Welfare (Miscellaneous Provisions) Bill 2023. I welcome the Minister, Deputy Humphreys, and her officials.

Any member acting in substitution for a member of the committee should formally notify the clerk if he or she has not already done so. Divisions will take place as they arise. Members must attend for divisions in person in the committee meeting room but may attend generally remotely. Members attending this meeting in accordance with Standing Order 106(3) should be aware that, pursuant to that Standing Order, they may move amendments but cannot participate in voting on those amendments.

Provisionally, this session is due to conclude at 4.30 p.m. We may suspend between 1 p.m. and 2 p.m. Is that agreed? Agreed.

Does the Minister wish to make an opening comment before we proceed?

Minister for Social Protection (Deputy Heather Humphreys)

No. I am happy to go through the amendments.

SECTION 1

An Leas-Chathaoirleach

Amendments Nos. 1, 10, 11, 13 to 16, inclusive, and 19 are related and may be discussed together, by agreement. Amendment No. 19 is consequential on amendment No. 16.

Deputy Donnchadh Ó Laoghaire

Am I right in saying all the amendments grouped relate to sections on deferred pensions and that there are no others in the group? I want to know to give clarity to the discussion.

Deputy Heather Humphreys

The ones grouped relate to the total contributions approach. These legislative provisions were not ready when I introduced the Bill, so I am now introducing them through amendments. It was proposed that we do this.

Deputy Donnchadh Ó Laoghaire

Okay.

Deputy Heather Humphreys

I move amendment No. 1:

In page 5, line 21, to delete "Section 15(b) and section 51 come into operation" and substitute "Section 15(b) comes into operation".

I will speak generally to the total contributions approach and then to each amendment in the group individually to explain what it means.

The Pensions Commission recommended the full transition to a total contributions approach only and the abolition of the yearly average approach to be implemented as soon as possible, with a transition period of ten years. It also recommended that the current interim total contributions approach should become the definitive total contributions approach. In other words, 40 years, or 2,080 contributions, are required to qualify for a maximum rate of State contributory pension.

The total contributions approach includes provision for ten years of PRSI credits and 20 years of home-caring periods, but with a cap of 20 years of combined PRSI credits and of home caring. The total contributions approach involves a fairer and more transparent system, with the person's lifetime contribution more closely reflected in the benefit received. This approach will eliminate the anomalies inherent in the current yearly average system, whereby, for example, a person who joins the social insurance scheme at 55 may get a full pension whereas a person who has worked on and off for 39 years since school may get only a 90% pension. During the ten-year transition period, a person's pension will be calculated using two methods, and the person will be granted a pension using the higher of the two calculations. The first method will use the full total contributions approach, TCA, whereby a person will require 40 full years of reckonable contributions to receive a full pension. The second method will, in the first year of operation, calculate what a person's pension would be under the existing yearly average approach. The pension rate of payment will then combine 90% of the yearly average rate with 10% of the TCA rate. The proportion accounted for by the yearly average rate will then reduce by 10% over each of the subsequent ten years until the pension calculation is fully based on the TCA method only. The first year of phasing out will begin in January 2025, but it is important that these measures be enacted now so people are fully aware of the changes.

Amendment 1 is a technical amendment and is consequential to the later amendment to section 51, which introduces the actuarial rates for State pensions – contributory – for each of the deferred pension ages of 67, 68, 69 and 70. As a result of their insertion, this removes the need for a commencement order in respect of section 51.

Amendments Nos. 10 and 11 entail a substitution of line 10. It is a technical change to allow for the insertion of a new definition for the yearly average approach.

Amendments Nos. 13, 14 and 15 are technical amendments to include references to the new section 6D, which sets out the ten-year transitional arrangements for the total contributions approach.

Amendment No. 16 is quite long. It sets out the substantive and consequential changes required to the Act to provide for the ten-year phased transition to the total contributions approach, or the aggregate contributions approach, as it is called in the Act. The effect of the consequential amendments is to provide for the calculation of the contributory State pension under both the existing yearly average approach and the alternative yearly average approach.

Amendment No. 19 is another technical amendment, to reflect that the Bill will now contain provisions to provide for the transition to the total contributions method of calculation of the State contributory pension. This amendment changes the Title of the Bill to refer to this feature.

The matter is a bit complicated, to be honest. I will be happy to take questions. If the members want me to go through the information again, I will be happy to do so. I will give a quick overview. Basically, one of the key recommendations of the Pensions Commission was the transition to the total contributions approach. This entails a fairer system for calculating a person's pension. It takes account of the total number of contributions a person has made over his or her lifetime. You get your pension based on the total number of contributions. The yearly averaging approach has given rise to anomalies, whereby a person who works from the age of 55 to 66 could get a full State pension while a person who started working at 17 or 18 and was away for a few years, thereby not having the full amount, or who worked for, say, 39 years on and off, qualifies for a reduced pension. That is unfair. For that reason, and in line with the recommendations of the Pensions Commission, the Government has agreed, as part of a package of pension reforms, that the yearly averaging approach for calculating State pensions will be phased out over ten years. The phasing out will not start until January 2025. I am sorry but it is quite complicated.

Deputy Donnchadh Ó Laoghaire

I have a couple of general points. It is absolutely the case that the total contributions approach is fair, particularly to women and those who have had caring responsibilities. In my office, and, I am sure, the offices of the Minister, Deputy Ó Cuív and the Leas-Chathaoirleach, we regularly see women who rely on their partners' payments and who are not in a position to get a full pension, albeit that this position has improved in the past couple of years.

I want to check my understanding of what the Minister is saying. At the minute, you will be awarded whichever is the higher, either the total contributions or the yearly average. Am I correct that the step-down approach based on aggregation will apply to a person if it results in the higher amount but that if the total contributions amount results in the higher amount, the person will still be offered that, meaning there will still be two potential options, but that at the end of the ten years the yearly average approach will have been eliminated, having been stepped down, probably to the point where it would not be better for anyone anyway?

People can still get the full 100% total contributions during the course of ten years. That is fine. I want to ask if it is envisaged - it will not be contained in the legislation - that this will have any knock-on effect on the buying back of stamps. Will there be any implications for that or will it remain much the same as it ever was?

Deputy Heather Humphreys

Yes, it is the voluntary system so if someone finds they will be aged 66 next year and do not have enough contributions, based on the other legislation I am changing here, you can continue to work on and pay your contributions and get an increased benefit. That is if you were short the 40 years. The way this works is that people get the best of both worlds and it will continue to be voluntary. It is voluntary.

Deputy Donnchadh Ó Laoghaire

Yes, but does the buying back, the purchasing of stamps, remain the same?

Deputy Heather Humphreys

The existing voluntary contributions will remain the same.

Deputy Éamon Ó Cuív

It is interesting to look at the history of the averaging system. When pensions initially came in during the 1950s, if there had been a TCA, it would have been impossible for everybody. That continued on and then of course there was another lacuna in the system. There was no self-employed PRSI until 1992 I think. Therefore, if someone had been a farmer or self-employed all his or her life, that person would have had no contributions. Again, it would have been totally unfair to have a TCA system. It could be said that they had not paid, I accept that, but they could not pay. It was not that they would not pay; they could not.

When we get to 2025, it will still be only 33 years since 1992 so somebody who started to pay in 1992 and has paid every year since will not get a full pension on the TCA basis. I know they would on the averaging system. If we get to 2026, 2027 and 2028 there are another seven years left in this where someone could get caught because they were always self-employed. Proportionately their averaging would be down over those seven years. That is question number one. Does the Minister want my two questions together or take one at a time?

Deputy Heather Humphreys

I can answer this question now. It is recognised that self-employed contributors will be affected by the TCA for the first three years, which are 2025, 2026 and 2027. This is because mandatory self-employed contributions were introduced in 1988.

Deputy Éamon Ó Cuív

It was in 1988?

Deputy Heather Humphreys

Yes, therefore a self-employed contributor will be unlikely to have 40 years of self-employed contributions until 2028. However, due to the phased transition, the financial impact should be limited specifically because a self-employed person drawing down their pension at age 66 in 2025, who would have received the maximum rate under the yearly average, will see their pension reduced by €2.08 due to the transition. A similar self-employed person drawing their pension in 2026 would see their pension reduced by €2.77. Again, a similar self-employed person drawing down their pension in 2027 will see their pension reduced by €2.08 per week.

Deputy Éamon Ó Cuív

Apologies I thought it was 1992, from memory.

Deputy Heather Humphreys

I would not have known, that is just to clarify that.

Deputy Éamon Ó Cuív

My second question is, do we know in the last year or two years how many people are better off on TCA versus the averaging system? In other words, everyone goes in and the calculations are done for them and the years spent caring for children are taken into account in one system and are not in the other system. It is all put in a mixing bowl and an answer comes out. Then we either go for TCA at the moment or averaging. Do we have any idea how many people at the moment are relying on averaging? It has nothing to do with the self-employed per se but because of the way life works.

Deputy Heather Humphreys

Just to say that for anybody retiring next year this does not kick in until 2025. For anybody who is on the pension that is where it stays. I did ask the same question of the officials as the Deputy asked me and I am waiting to get an answer. I asked the question of how many people this would impact. It is approximately a third, a third and a third. It is people who do not have the long attachment with the workforce and those who cannot avail of the caring period. What helps this is the caring period-----

An Leas-Chathaoirleach

Maybe the Minister can answer and then the Deputy can-----

Deputy Éamon Ó Cuív

Will the Minister clarify what each third is?

Deputy Heather Humphreys

By 2033, approximately one third of claimants at that stage could be worse off if they do not have the long attachment to the workforce and if they do not have credits for caring periods.

Deputy Éamon Ó Cuív

That was not the question I asked. I asked about this year.

Deputy Heather Humphreys

This year?

Deputy Éamon Ó Cuív

Do we know for real so we are not guessing? For this year, when the calculation and the mixing bowl is done, and the TCA and averaging calculations are done, do we know how many-----

Deputy Heather Humphreys

Can I get those figures for the Deputy?

Deputy Éamon Ó Cuív

How many did they then actually do on the averaging and on the TCA? That is why I was a bit puzzled about the third, third, and the third because there are only two choices. It is binary. I spend time, like every other TD I presume, looking at the contribution records and doing the calculations - getting the kid's birth dates and all of the rest. At the moment, it seems that a lot more people are better off on the averaging than there are on the TCA. I might be totally wrong, or maybe I am talking to the wrong people or maybe the people coming to me do not have great social insurance records or whatever but that is what I am finding. I am just curious when it is calculated in the totality of all claimants how it breaks down. It would be useful for the committee to get those figures because it will begin to have an impact from 2025 on.

Deputy Heather Humphreys

There are two things here. Number one, if people want to work for longer to earn more credits to get a better pension they can do so now up to the age of 70. That could add another five years' worth of credits. The second thing is because we are bringing in the pension for carers now, there are a lot of people who may not have been contributing because they were at home caring so when that is added in as well, people should be better off, generally.

Deputy Éamon Ó Cuív

No.

An Leas-Chathaoirleach

Will the Deputy let the Minister conclude and she can come back in with any additional information?

Deputy Heather Humphreys

We will come back to the Deputy with those specific figures because I know where he is coming from. He wants to know exactly how many people it will impact. I do not know how many at the minute, to be honest. We made this decision that this was a fairer system because people were coming in and starting to make contributions at age 55 and getting full pensions. All they had made contributions for was ten years. Once they had contributions for ten years before they retired they got the pension. To me, it is a bit unfair that they got a full pension.

Deputy Éamon Ó Cuív

I would never begrudge anybody and I am sure the Minister would not either.

Deputy Heather Humphreys

No, I do not begrudge but the point can still be taken though.

Deputy Éamon Ó Cuív

I would say the Minister's heart bleeds for the person who did five weeks at 18 and then started back at 54 years of age and they lose out because of the few extra contributions. I agree that the averaging is full of anomalies. However I am still interested to find out how many people in the last year - because that is an actuality of fact - were better off on the averaging system, given the realities of people's lives. The 40-year challenge is quite a big one and in a lot of cases, the way the thing is structured it is fair to say a lot of people are better off on the averaging system. However I could be incorrect because maybe the wrong people are coming to me.

If we had those figures, we could have an informed debate about the impact of this.

An Leas-Chathaoirleach

Perhaps the Minister will be able to supply those figures to the committee.

Deputy Heather Humphreys

I will get those figures for the committee.

Deputy Donnchadh Ó Laoghaire

Off the back of Deputy Ó Cuív's questions, from the point of view of the Pensions Commission, it could be argued that as we currently have both choices, they should be continued. Why not continue with that? Is the cost of administration or the cost of payments the reason not to allow the choice to continue? I imagine it is the cost of payments.

Deputy Heather Humphreys

It was part of keeping the pension age at 66. It was also believed to be a fairer system, when we were bringing in the pension for carers of more than 20 years. We are giving people the ability to work a little longer so contributions could be increased to get a bigger pension. In addition, it is anticipated that it will save somewhere in the region of €40 billion by 2070. It is all added up. It is all as a consequence of not increasing the State pension age and leaving it at 66 that we had to make these decisions.

Most pensions are calculated under the yearly average first. We do not know how the total contributions will actually work. We do not have those figures but we will see if we can find them. Is that all right?

An Leas-Chathaoirleach

Will those be supplied to the committee?

Deputy Heather Humphreys

We will supply them to the committee.

Amendment agreed to.

Section 1, as amended, agreed to.

Sections 2 to 7, inclusive, agreed to.

NEW SECTION

Deputy Donnchadh Ó Laoghaire

I move amendment No. 2:

In page 6, between lines 28 and 29, to insert the following:

“Report on extending availability of full Parent’s Benefit to Lone Parents

8. The Minister shall prepare and lay a report before the Houses of the Oireachtas on extending the availability of the full duration of Parent’s Benefit to lone parents to examine the effect that enabling all children to equally avail of the full duration of this Benefit would have and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.

I have a series of amendments. The nature of this type of legislation, and the provisions regarding a charge on the Exchequer, means that I cannot move quite the amendments I would have liked. We tabled an amendment regarding the right to retire at 65 years of age but that was ruled out of order.

Amendment No. 2 relates to full parent's benefit for lone parents and seeks a report on extending the benefit's availability. There is an assumption in this and previous legislation that families are two-parent families. That is obviously not always the case and much of social protection policy, in other ways, is framed on the basis of that. One-parent organisations have asked that a one-parent family would get the entire 14 weeks of parental leave, increasing to 18 weeks in 2024. When it comes to a new baby, whether it is born into a family with two parents or one, it is the baby that should be the focus. Babies should not lose out on the additional supports and time spent with their parent at home. I ask the Minister to consider that. The one-parent organisations have been raising this issue for some time. We seek through this amendment a report on extending the availability of full parent's benefit to lone parents.

Deputy Heather Humphreys

A report was already prepared on this matter at the request of Deputy Kerrane. That was laid before the committee on 27 June 2023. I am happy to provide the report again to the Deputy. In line with the provisions of the EU work-life balance directive, nine weeks of parental leave is not transferable between parents. The EU directive clearly states that. We want to encourage an increase in the number of men taking leave and equal participation in care work, thus achieving gender equality and investing in the development of children. A provision to allow one parent to take the dual entitlement to leave would place an increased burden on that individual's employer. As the Deputy is aware, an employee's eligibility for parent's benefit follows his or her eligibility for the associated leave, assuming the contribution and other qualifying conditions are met. The arrangements regarding parental leave are a matter for my colleague, the Minister for Children, Equality, Disability, Integration and Youth. He sets the policy on that and I make the payments.

I am reluctant to put reports in legislation. I did not have any in last year's legislation, but every report I was asked for I provided. I give the Deputy my word I will do that again this year. I am not keen to accept the amendment for that reason. I have a report and am happy to provide the one that was published on 27 June this year.

Deputy Donnchadh Ó Laoghaire

I thank the Minister. I will examine that report. I will make a couple of points regarding what she pushed back on in respect of transferability. I agree in the instance of two-parent families that it is right that the time be shared, which is the model in many countries. It is very often the case that people will take a chunk of leave and will then change places and take another chunk and so on, but that is obviously not an option for a one-parent family. They do not have that flexibility.

EU legislation does not preclude us from going further. It provides a baseline but I do not think it would ever preclude us from going beyond that. The mechanism for the definitions and legislative measures required to give effect to this would not necessarily be simple but it would be important and valuable. The EU does not hold us back in any respect. The ideal model is a portion for both parents and then a transferable portion. That is the best model but none of that applies in the instance of the one-parent family. They only have the portion that would be equivalent to one person in a two-parent family. The person who loses out on that is the parent but also the child in that the parent has to go back to work, leaving the child with grandparents, childminders or whatever, at an earlier stage than two-parent families.

Deputy Heather Humphreys

I hear what the Deputy is saying but we pay the benefit once the leave is taken. The policy on leave is with the Department of the Minister for children, Deputy O'Gorman. That is where it is. It is very clear. It is our understanding that the EU work-life balance directive for this came in. We are increasing the period of leave that can be taken to nine weeks next year. I do not see that I can change it, to be honest.

Deputy Donnchadh Ó Laoghaire

I will not press the amendment if the Minister will say that at the next meeting she has with the Department of children this matter will be raised and she will say it was raised at the committee.

Deputy Heather Humphreys

I will certainly do that. I will raise it.

Amendment, by leave, withdrawn.

Section 8 agreed to.

SECTION 9

Question proposed: "That section 9 stand part of the Bill."

Deputy Éamon Ó Cuív

Will the Minister outline exactly what is in section 9? It seems to relate to income exempt from limits.

Deputy Heather Humphreys

Section 9 provides for increases in the graduated rate of jobseeker's benefit. The purpose of the section is to give effect to the increase in the graduated rates of jobseeker's benefit and jobseeker's benefit, self-employed, arising from budget 2024 measures.

The provision will come into operation on 28 December 2023. It provides for an increase in the weekly rates of jobseeker's benefit and in the circumstances where the person is in receipt of a graduated rate and is subject to a penalty for failure to comply with their obligations in relation to seeking employment or training. It will be €84.30 in the case of a person referred to in all these subsections. Then it goes to €120.20 and then to €147.20. That is what it is allowing as regards the increase in personal weekly rates.

Deputy Éamon Ó Cuív

How will this tie in when we get into pay-related measures?

Deputy Heather Humphreys

When it comes to pay-related matters, I will come forward with proposals on the minimum rates. I have to work that out. When I am bringing through that legislation I will have proposals on how we deal with this. I do not want anybody to be worse off. That is basically what I want to make sure of.

Question put and agreed to.

An Leas-Chathaoirleach

Amendment No. 3, in the names of Deputies Naughten and Berry, has been ruled out of order due to a potential charge on the Revenue. Neither of the Deputies is present to speak to it.

Amendment No. 3 not moved.

Sections 10 to 12, inclusive, agreed to.

SECTION 13

Question proposed: "That section 13 stand part of the Bill."

An Leas-Chathaoirleach

Is section 13 agreed?

Deputy Éamon Ó Cuív

The Leas-Chathaoirleach is in an awful hurry. Will the Minister outline the operation of section 13?

Deputy Heather Humphreys

This section provides for an extension of child benefit to 18-year-olds in full-time education. It will commence in September 2024. I would love to have started it earlier but I cannot. It is in line with the school year. It is an improvement.

Deputy Éamon Ó Cuív

It is a very good improvement and in fact goes back to where we were. It is back to the future. I agree with that. In fact, there is a good case that for as long as children are in full-time education, that should be paid. That is a big step. Will the Minister explain why it is 3 September rather than 1 January?

Deputy Heather Humphreys

We had to decide a date and 3 September is the start of the new school year. We thought that was an appropriate date to start it. We have to do some work on our systems and prepare for that because every time I change something, as the Deputy will know, programmes have to be written for it. As I say, I would have loved to have brought it in earlier but it will not be until 3 September.

Deputy Éamon Ó Cuív

All the other rises are from 1 January, are they not?

Deputy Heather Humphreys

Yes, they are. Not everything can come on 1 January, as much as I would like that.

Deputy Éamon Ó Cuív

There are disappointed people out there, although not a lot of them. If you are-----

Deputy Heather Humphreys

It is an expensive measure. I fought hard to get it.

Deputy Éamon Ó Cuív

I congratulate the Minister on that. How expensive is it?

Deputy Heather Humphreys

For the full year, it will cost €64 million.

Deputy Éamon Ó Cuív

That is for the full year.

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

That is out of a budget of €25 billion.

Deputy Heather Humphreys

That may be but the Deputy knows how it is when you start to count. He has been here. He knows. You have to make decisions at the end of the day.

Deputy Éamon Ó Cuív

The point is taken. Does the Minister accept that is the equivalent of €64 out of €25,000, proportionately?

Deputy Heather Humphreys

Sorry?

Deputy Éamon Ó Cuív: It is proportionate to €64 out of €25,000. If you had €25,000, it is like spending €64.

Deputy Éamon Ó Cuív

It is proportionate to €64 out of €25,000. If you had €25,000 it would be like spending €64. If you start talking about billions, it is impossible for people to grasp the proportionality in question. As the Minister knows, no more than myself, if you come up with a saving or expenditure in a Department of €1 million, it does not save any money. It is very small. When you take €25 billion and then €64 million, it is not that big an amount of money.

Deputy Heather Humphreys

As I said, it is an improvement. I fought hard to get it and I am glad-----

Deputy Éamon Ó Cuív

I welcome it. If somebody is 18 years of age in February but they are still under 19, would they start getting paid from 3 September onwards?

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

Okay. I am not going to be voting against the Government. The Minister can relax.

Question put and agreed to.

SECTION 14

Question proposed: "That section 14 stand part of the Bill."

Deputy Éamon Ó Cuív

On the working family payment, people getting employment of any type is much more preferable as a system than jobseeker's allowance and all these combinations. I think the Minister knows that that interface of low-paid people is inhibiting people from working. Has analysis been done to work out what kind of costs would be associated with extending the income limits for the working family payment? Even though the Minister has raised the threshold every year, the reality is that rising wages mean we are not really getting more people onto the working family payment. People always say that so many people are taken out of the tax net when income tax bands are changed but they are not because wages are going up, so they all arrive back instantly. The same people wind up back paying income tax. It is similar here.

Deputy Heather Humphreys

We are promoting this. The €54 per week is a considerable increase in terms of the income threshold. The Deputy is right. I want to see people given the opportunity for work if it pays. Is he looking for some figures?

Deputy Éamon Ó Cuív

Have the numbers in receipt of this payment increased? Have we any idea of whether it would cost an awful lot of money if we were to increase the threshold a bit more?

Deputy Heather Humphreys

This measure increases the threshold.

Deputy Éamon Ó Cuív

I know it does but you have to subtract from the increase in the threshold the increase in the wages. I am wondering what would happen over time.

Deputy Heather Humphreys

The €54 a week is a fair jump. That is a big increase.

Deputy Éamon Ó Cuív

Is the number of people on the scheme increasing dramatically?

Deputy Heather Humphreys

It has been increasing over the past three years. I do not have the figures of how many are on the scheme now. I am told it is 53,000.

Deputy Éamon Ó Cuív

How does that compare with when it started?

Deputy Heather Humphreys

I am told it has been increasing for the past three years. It has gone up in the last three years.

Deputy Éamon Ó Cuív

Have the numbers gone up? That is the point I am trying to get at.

Deputy Heather Humphreys

The numbers on the scheme have increased. I do not have that information but I will get it for the Deputy.

Deputy Éamon Ó Cuív

It would be desirable for them to have gone up.

Deputy Heather Humphreys

I take the point. I was out meeting carers on Monday. I might as well tell the Deputy this. They got an increase of €12 a week. They were happy with the increase, obviously, and they are getting the lump sum payment this week. That is €400. A lady said to me that she got the increase and then she got a letter from the local authority to say her rent was going up. I take the Deputy's point.

Deputy Éamon Ó Cuív

All I am saying is that this is a very attractive, positive scheme that encourages work.

For a long time, and well before I was in politics, this interface between welfare and work was a concern to me. Sometimes the welfare system was an inhibitor to work. This is one that always encourages people to work. The more it is the scheme of choice for people rather than jobseeker's' benefit and the X and O system and all the complications of it, the better. I just think it is a good scheme. I wonder how sensitive it is cost-wise to increase the threshold.

Deputy Heather Humphreys

I have numbers now. I did get them. In 2020, there were 48,188 people on the scheme. In 2021, there were 45,365 people on it. In 2022, it came back up again to 47,115 people. I do not have projections as to how many more there will be and I will not know until applications come in. We will advertise it to make sure as many people are aware of it and that they can apply for it. The wages are going up and we are in a tighter labour market now. Obviously, employers are paying more. I was speaking to someone this morning who said employers do not actually pay the minimum wage now and that they pay well above it. The shops are saying they have to do this to get the staff.

Deputy Éamon Ó Cuív

This is what I am saying. I have a suspicion but I cannot prove it with regard to the cost of it, that as wages go up, the amount of money goes down and therefore it might not be as expensive as it looks. The more generous we are with it, the greater the incentive to take a job in the lower end.

Deputy Donnchadh Ó Laoghaire

In general terms it is a very important payment and it does encourage work, with one exception being one-parent families where their youngest child is over the age of seven. I have never been able to get my head around this issue, to be honest. Why are we forcing people onto a jobseeker's transitional payment when their youngest child is aged seven? I have dealt with constituents who have lost a lot of money as soon as the child comes to seven years of age because they had been able to get the working family payment and they can no longer get that once the child reaches seven. It is neither coherent nor fair. The one-parent family payment cut-off should never been cut from that level down to the age of seven. It should have stayed well into the teens and I believe it was age 14 initially. That cliff edge is a real problem. The other issue I have with the working family payment is the fact that people cannot get the fuel allowance. This is another issue.

In her response to my questions, will the Minister address another issue? Through replies to parliamentary questions and so on there has been some talk about reform of working age payments and that there would be a working age payment. There is a reference to it in the Green Paper on disability payments . It is not actually a very helpful reference, to be totally honest, because most people reading the document do not have a clue what it means and particularly when it is still a very abstract concept, even in this institution. I have a sense of what it means, but if reform of the working age payments is happening, what stage is that at? Will the Minister give an update on that?

Deputy Heather Humphreys

We are doing work on the working age payments. It still needs a bit more. We should have that next year given the work we are doing on working age payments.

Deputy Donnchadh Ó Laoghaire

Would it be early or late next year?

Deputy Heather Humphreys

It will probably be a bit later, but obviously we will try to do it as quickly as we can. We have to put it out to public consultation and see what comes back on that.

Deputy Donnchadh Ó Laoghaire

Would this be a straw man type of thing?

Deputy Heather Humphreys

Yes. Our stuff is nearly all straw man.

Deputy Donnchadh Ó Laoghaire

Okay. That is good.

Deputy Heather Humphreys

The straw man proposal works well because we are not starting with a blank sheet and we are able to change it as we see fit or come forward with recommendations.

On the working family payment it can be paid up to the child becoming 22 if he or she is in full-time education. It is also available to lone parents who are in employment for at least 38 hours per fortnight. Lone parents who move to the working family payment may also apply for the back-to-work family dividend. To extend eligibility for the jobseeker's transitional payment would be contrary to the policy goal, which is to change the one-parent family payment. That was introduced in 2015. The changes we are doing are to tackle the long-term social welfare dependency and its associated poverty risks. This is done through a tapering of income supports and a more active engagement process offering enhanced education, training and employment supports. As I understand it, a single parent gets the working family payment up to the child reaching the age of 22 if the chid is in full-time education.

Deputy Donnchadh Ó Laoghaire

I have never understood precisely what those policy objectives are. Are we saying that when the child reaches the age of seven, the parent should be in a position to move to full-time work? Is that basically the policy objective rather than for part time work? The Minister refers to the generality of families but I am focusing specifically on one-parent families.

Deputy Heather Humphreys

Yes.

Deputy Donnchadh Ó Laoghaire

If they are on the working family payment, then they are at work. They are already at work. If our objective is to encourage them to work and they are at work already, the back-to-work dividend does not match the loss and is only there for two years anyway. I do not believe it even comes close to matching the loss.

Deputy Heather Humphreys

The aim is to migrate to in-work . We encourage people to take up and to keep employment. We want them to migrate to working.

Deputy Donnchadh Ó Laoghaire

They are working. Are we expecting when the youngest child is seven years of age that the parent should be working absolutely full time? Given the cost of childcare and so on, this is not always possible for a lot of single parents.

Deputy Heather Humphreys

The aim is to mitigate poverty. They are better if they are working. There is the jobseeker's transition and then there is the working family payment. There are two payments there.

Deputy Donnchadh Ó Laoghaire

You cannot get the working family payment on the jobseeker's transition payment.

Deputy Heather Humphreys

No, you cannot.

Deputy Donnchadh Ó Laoghaire

There is a serious cliff edge there. That is the reality. Maybe it is not a huge number of one-parent families, but as far as I have met these people and have spoken to them, there is a cliff edge there and it affects them very badly. These are not wealthy people.

Deputy Heather Humphreys

I will give a commitment to the Deputy that we will look at it.

Deputy Donnchadh Ó Laoghaire

Please, yes.

Deputy Heather Humphreys

I cannot do anything but I will look at it. The Deputy makes a good point and, in fairness, I know what he is saying. I will look at it.

Deputy Donnchadh Ó Laoghaire

I thank the Minister.

Deputy Bernard J. Durkan

I congratulate the Minister for a very comprehensive and progressive budget in respect of her Department addressing issues that long awaited somebody to address them, and her Department anticipating other issues. It is a good and progressive response to the challenges behind us and ahead of us at present which affect everybody.

I will raise two issues that affect one group of people who are carers. I find that a lot of carers are lone parents who are caring all their lives for a child with special needs who is now an adult. The carers are tired and may have to release the adult into residential care because they are worn out. They have been at it all their lives. That is the job they took on and they took it on in good faith, but they are now at the stage where their own age is catching up with them and they are unable to keep up the same pace. When they release the adult child into residential care, they lose the carer's allowance even though they bring the once-upon-a-time child and now adult back into their homes, very often for half the week and at weekends. They are happy to do that and, in fact, the residential care is their respite as they get older. Will the Minister look at that, perhaps not at this stage but in the future? I am sure I am not the only one and that many other Members would have dealt with such cases as well.

I also am concerned about the payment that is available for children who have special needs and are adjudged to have special needs, or not, as the case may be.

An Leas-Chathaoirleach

I remind the Deputy that we are looking at the section that deals with the working family payment. I will allow the Deputy's contribution but ask him to please keep it brief.

Deputy Bernard J. Durkan

My point is there is no seamless transfer from domiciliary care allowance to another payment. Very often the response is that the child needs no more care or attention than any child of a similar age. I challenge that response and I have had countless issues to deal with over the years. It means that very often, that child is an indefinite burden on the parent or parents, as the case may be, because no payment is received and then at a later stage, the parents suddenly find out that they are unable to continue due to insufficient resources. All I ask is for the Minister to consider this matter and find out how this aspect affects individual parents. Incidentally, I have seen cases where under no stretch of the imagination could it be assumed that the child, who is now an adult, needed no more care or attention than any other child of a similar age. I have spoken to the Minister about this matter before and I have no doubt that I will speak to her about it again.

I thank the Leas-Chathaoirleach for allowing me to expand on this issue. I am sure he will be glad to know that I must depart to attend an adjoining meeting, which is still in session. I am supposed to attend there as well.

An Leas-Chathaoirleach

Perhaps the Minister will respond even though the Deputy's query is not strictly related to section 14.

Deputy Heather Humphreys

I take the point made about the domiciliary care allowance because then a person is assessed as to whether he or she qualifies for a disability payment or not. The age of 16 is quite young for a person to get the full payment and there is a conversation to be had on that. The way it is at the minute is that a person is moved on to the disability payment at the age of 16. If a person does not quality for the disability payment then that is it and payments finish at 16 years. The question is should a person get it to 18 and that requires a conversation. Some people agree with extending the age but some people will not and it just depends. I am happy to look at these things. I have done a good few things over the last few budgets but I cannot do everything and we do look at all these things.

The only thing is that if a carer is older and he or she has not been working, then the carer's pension will make a big difference. The provision will apply to people who have ceased caring but who, having reached 70 years or more, could not get a pension. Whenever I bring in this legislation, such people can re-apply and see whether they can receive the pension. There will be a lot of people who will feel very relieved by the provision because before this, they did not qualify because of their partner's income.

Deputy Durkan also asked about the carer's allowance. It is an income support for full-time care and attention. A carer can get the allowance for up to nine weeks after the person being cared for goes into a centre full-time. I see what the Deputy is saying but in trying to help specific cases you can sometimes, as the Deputy well knows, open the floodgates and we want to target resources at the people who need them most.

Deputy Bernard J. Durkan

I thank the Minister.

Deputy Éamon Ó Cuív

On looking at the little booklet the Minister has supplied to us today, which we deeply appreciate, the statistics for 2022 are a mine of information.

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

If I have read the booklet right, the working family payment cost €415 million in 2016 and the scheme cost €361 million in 2022, which is the last year to feature in the booklet.

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

I find the numbers interesting, as there were 57,000 recipients in 2016, and 47,000 recipients in 2022, which is a decrease. To me, the decrease seems to have been caused by increased wages or salaries that people are paid. The scheme seems to have a good scope and I am curious to learn whether, when budget 2024 was being prepared, there was a projection as to how many people would be covered. As I said earlier, this is a really positive scheme as it helps people to work and encourages them to avail of employment. I understand that once a person is accepted on to the scheme he or she stays on it for a year no matter what happens his or her salary and, therefore, it is a good incentive. The figures tell us that this scheme is not running away from us. In fact, the scheme has gone the other way in cost terms up to 2022 and I do not have figures beyond that.

Was consideration given to the following point? The scheme is called the working family payment but we take a very liberal view of a family unit now. Can we consider singles as a family? In other words, there is a lot of talk. I do not like the untidy thing of picking out artists and saying they get the basic wage but a person who happens to be a carpenter does not get a basic wage. To me, it seems contradictory to pick out one section of society. I would rather do social welfare in the way that it has always been done, which is on a universal basis. While I believe the application of a basic wage concept would be very complex, the beginning of that is this scheme and reform of the means-testing of people who are on jobseeker's allowance etc. in order that we move towards the concept that it always pays significantly to work, whether it is self-employed or employed working. The Minister will know that I have had a hang-up about this because I have worked with it for too long prior to getting into politics and saw the inhibitions on people trying to progress of means-testing, where they feel they are jumping up and somebody is pulling them down and that they will be supported as long as they stay down. I am curious about that and wonder whether it was ever thought to say any person who is on a low income would get a supplement, or call it what you want, rather than always confining it to people who have got families.

Deputy Heather Humphreys

The Deputy mentioned figures and the cost of the working family payment. In 2016, big changes were made in the lone parents' reforms, so that would have started a drop in figures. The changes that we made then reduced the number plus, as the Deputy said, another reason is the labour market.

We are promoting the working family payment and we hope the number of people availing of it will increase. Like the Deputy, we want to make work pay. Apart from all that, working and getting out into the world is good for people's mental health. People feel more fulfilled when they can go out and go to work but that is my personal view.

As I said earlier, we are working on the design of the new working age payment policy. We will consult the public on the policy. Again, our principal drive is that we should award people who go out to work.

Deputy Éamon Ó Cuív

Yes, but does the Minister accept that while somebody could come up with a fantastic scheme, the problem is getting there? I ask that any changes made are incremental, rather than adopting a big-bang approach where we would have to rip up the whole system and replace it overnight.

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

I mean that the Minister should know where she is trying to get to and she will get there over time, by adjusting schemes like means-testing, the jobseeker's allowance, the working family payment, etc. We should get there that way, rather than in a big bang where we eliminate the old system and some day bring in a basic income system or whatever.

Deputy Heather Humphreys

We are not going to do a big bang, because that causes a lot of problems, as we know.

Deputy Éamon Ó Cuív

Yes.

Deputy Heather Humphreys

Whatever we do it will be done gradually, as I prefer.

Deputy Éamon Ó Cuív

Yes, incrementally.

Deputy Heather Humphreys

It is taking quite a while but all of the means tests are being fully reviewed. I have taken on board all of the recommendations on means tests made by the Deputy and we will come forward with a review in the new year.

Deputy Éamon Ó Cuív

I really appreciate that, as I was going to ask the Minister about that later. Does she think that she will then legislate and make regulations later in the year?

Deputy Heather Humphreys

We will have to look at it as part of the budgetary process and that is the way it works. At least we will have the data and will conduct a complete review. I did change the means test for carers, as the Deputy knows. Some means tests are set very low and I am of the mind that we should change them.

Deputy Éamon Ó Cuív

There is one curious thing. From 2016 to 2022, the number of one-parent families getting the working family payment increased from 28,000 to 29,000 while the number of two-parent families getting it decreased from 29,000 to 18,000. The loss has been entirely among two-parent families rather than one-parent families.

Deputy Heather Humphreys

Yes, the number has fallen all right. That is due to the increase in employment.

Deputy Éamon Ó Cuív

That is what I am saying. That means this scheme is not costing more in real terms, so a lot more generosity can be afforded.

Deputy Heather Humphreys

I take the Deputy's point. He should try explaining that to the Department of Public Expenditure, National Development Plan Delivery and Reform some time.

Deputy Éamon Ó Cuív

I take the Minister's point too. Absolutely.

An Leas-Chathaoirleach

We have had a wide-ranging discussion on section 14. I will put the question.

Question put and agreed to.

Section 15 agreed to.

SECTION 16

Question proposed: "That section 16 stand part of the Bill."

Deputy Éamon Ó Cuív

What is the purpose of the section?

Deputy Heather Humphreys

It is to change the name. It used to be called the "old age" pension and now it is the "State pension (contributory)".

Question put and agreed to.

Sections 17 to 19, inclusive, agreed to.

SECTION 20

Question proposed: "That section 20 stand part of the Bill."

Deputy Éamon Ó Cuív

There was a debate just now with Deputy Durkan about the fact that the domiciliary care allowance ends at age 16. This is probably one of the trickiest payments for us to do the right thing because some parents like the €220, even though it is going to a child, but a lot of parents do not like it because it is going to the child. Sooner or later, society will have to grasp the nettle here. I accept that we need to work this carefully. I have often thought of this over the years because it was a live issue back in the day. It was not a cost-saving measure but a social measure because no other person would be given €220 at 16 years of age, totally independent of parents. It just would not happen. It is an anomaly from the past. Is there some way that a public discourse could take place with the persons affected so that we can move this issue forward?

We could even say at the start that if someone got the disability allowance, it would be paid to a parent or guardian rather than directly to the 16-year old, or that there would be an enhanced rate of domiciliary care allowance up to the age of 18, at which point it could be swapped over. This nettle will have to be grasped. One of the thought processes I had, which is very radical, is that a higher rate of domiciliary care allowance up would be paid for under-fives using the money saved on 16-year-olds because lots of people in those circumstances use such payments to pay for therapies and supports for their children. Let us be straight and honest about this. We know the importance of early intervention. This whole issue must be examined, as the Minister knows because she has said so. I wonder if all of us, the Government, the Opposition and everyone else, can move forward together on this because it is a serious issue. Some parents are aghast that this kind of money would be paid to one of their children.

Deputy Heather Humphreys

I have witnessed this, as has Deputy Ó Cuív, in my constituency office. We have cases where someone who is deemed fit for work but may not be capable of doing a regular job and, at the same time, it would probably be better for that person to get work. Then the parents lose the domiciliary care allowance when the young person reaches 16 because he or she does not qualify for the disability payment. That is very difficult and I understand that.

This is currently part of the discussion on the Green Paper on the cost of disability. We are consulting on that and getting views on it to see what is the best way forward. Many parents do not want a 16-year-old to get the full payment, which is €220 a week. The parents get child benefit for the child and the child gets €220 a week at 16. There may be some way that we could transition away from this anomaly to make it better support the people who are getting it. Deputy Ó Cuív knows that these are not easy conversations. We want to see if we could do something that would be better for the families and the users themselves. It is part of the consultation on the cost of disability report.

Deputy Éamon Ó Cuív

I thank the Minister.

Question put and agreed to.

NEW SECTIONS

Deputy Donnchadh Ó Laoghaire

I move amendment No. 4:

In page 11, between lines 24 and 25, to insert the following:

“Report on establishing a social welfare adequacy commission

21. The Minister shall carry out a review on establishing a social welfare adequacy commission in order to ensure social welfare rates meet the Minimum Essential Standard of Living. (MESL) to study the effect that adequacy of social welfare rates could have on addressing poverty levels and that the report shall be presented to the Oireachtas Joint Committee on Social Protection ahead of Budget 2025.”.

I am not the only person who made a point in this regard in this year's budget debate and in other years. There will always be politics in social protection payments but some of the type of politics that exists around payments in regard to the budget does not necessarily lend itself to good policy or even particularly fruitful public debate. It is about €10, €5 and all that kind of stuff. It can sometimes be divorced from the reality of what informs the cost of living for people, whether it is inflation, fuel prices or various issues like that. The last year and a half gave rise to particularly stark examples of that in regard to fuel and inflation.

It is our view that a model along the lines of the Low Pay Commission is the best method to try to inform the adequacy of social protection payments. A social welfare adequacy commission should be established that would be able to provide, on an annual basis, a benchmark, taking into account all the different inputs, which can vary at different stages. Inflation can be high or low at different stages. Food can form a higher or lower proportion of people's expenditure. I do not know if it will always be possible to provide a clear benchmark between payments and simple inflation as I think there are more complicated factors involved. The approach can be somewhat ad hoc and arbitrary, although perhaps less so this year than in the past four or five years. In addition, the level of some payments has not kept pace with the costs people are experiencing.

The Vincentian Partnership has done excellent work on the minimum essential standard of living, MESL. That could be one of the inputs but it need not be the only input. For this reason, we propose to establish a social welfare adequacy commission to ensure payments are adequate and people are kept out of poverty and not put at risk of poverty.

Deputy Heather Humphreys

I made the point earlier that I do not like including commitments to produce reports in primary legislation. This is complex legislation. As the Deputy knows, the work of the Vincentian MESL Research Centre is paid for by my Department. It provides an assessment of the income needed to participate in everyday life.

The work of the MESL also highlights the issues that may be better solved by greater access to services rather than increases in income. It looks at the whole thing. In this regard, as we all know, having access to secondary benefits, such as medical cards and supports in the areas of housing and childcare, can result in significant reductions in the minimum income standards needed by households, which presents another difficulty in using the MESL as a benchmark for the level of social welfare payments alone. The work of the Vincentian MESL Research Centre at the Society of St. Vincent de Paul is and will continue to be a valuable input into our policy-making process.

On an annual basis, my Department already assesses the social impact of the annual budget process, including in recent years the impact of once-off measures. I commit that we will publish a detailed social impact assessment of budget 2024, including the main tax and welfare measures, using the ESRI’s SWITCH microsimulation model by quarter 1 of 2024.

The Department also has three-year joint research programme on poverty and social inclusion with the ESRI. As part of this programme, the ESRI is currently working on a technical paper examining the relationship between the MESL income standards and the CSO’s at-risk-of-poverty thresholds. This will be published in 2024 and will further add to the evidence base on the relationship between MESL and poverty thresholds.

In terms of the core increases this year, we will have to look at it in the round because we had the weekly increases and then the lump-sum payments. The €12 increase in the core weekly payments will take effect from January. Over the last two budgets alone, we have increased the weekly payments by €24. In recent years, a €3 increase or maybe no increase at all was the norm. Therefore, a €24 increase over the last two years has been substantial. Then, for example, we can add in the lump sum. I have worked out that for old-age pensioners who live alone and get the funeral allowance; the €200 living alone lump sum, which they get this week; the €300 fuel allowance lump sum, which they got last week; a double payment at Christmas; a double payment in January; and, on top of that, the €12 increase in their weekly payment, there is an extra €1,710 per annum when all that is added up. That works out roughly at €32 extra per week when the whole lot is put together. If we do the same for the carers, we will see they will have about an extra €30 per week. That figure for carers could be much higher if they have children because they will get the €100 qualified child lump-sum payment and double child benefit. As I said, we will continue to look at it, but I give the Deputy the commitment that we will publish the detailed social impact assessment of the budget in 2024. We will continue to support the Vincentian MESL Research Centre in the Society of St. Vincent de Paul. It is an important document. We take that on board when we are devising our budget every year.

Deputy Donnchadh Ó Laoghaire

Much of that is good to hear. I am glad that it is relied upon. What does the Minister say to the proposal of a standing commission in line with the Low Pay Commission?

Deputy Heather Humphreys

There would have to be agreement within the Government on doing that. When we are putting together a budget, we have to look at the resources that are available to us. We have been very fortunate in the last number of years that we have had resources. I was here in 2013 and 2014 when things were a lot tighter. We have to look at everything in the round. The Government is committed to doing the best it can. We have tried to look after people this year and, indeed, last year with considerable lump sum payments and the two €12 increases. A proposal would have to be brought to the Government and then we would have to pass legislation if we were going to set up a commission to look at social welfare adequacy.

Deputy Donnchadh Ó Laoghaire

I take the Minister's point with regard to the budget. Obviously, the final decision would have to be for the Government. While the Low Pay Commission's recommendations carry a great deal of weight, of course they are not binding on the Government either. It could similarly be the case with the social welfare adequacy commission. Fundamentally, the decision has to be with the Government, but the recommendations that would be made could carry a bit of weight. The Minister might go away and think about it.

Deputy Heather Humphreys

We always think about things and we try our best.

Amendment put and declared lost.

Deputy Donnchadh Ó Laoghaire

I move amendment No. 5:

In page 11, between lines 24 and 25, to insert the following:

“Report on means-testing for Blind Pension and Disability Allowance

21. The Minister shall prepare and lay a report before the Houses of the Oireachtas on the means-testing eligibility requirement for Blind Pension and Disability Allowance and the impact that income threshold limitations have on access to these schemes and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.

This is related to what Deputy Ó Cuív said regarding means testing. There is scope for some modernisation in terms of means testing. I know the Government has committed to reviewing means testing of payments, but we do not have information on that yet. Social assistance payments are available to those who do not have enough PRSI contributions to qualify for social insurance payments. For example, someone who becomes unemployed but fails to qualify for jobseeker's benefit can apply for jobseeker's allowance instead. However, the entire household income is considered a means so it can be difficult to qualify for the full rate of €220. Sometimes, much of the money in a house can be going to one as opposed to the other.

Even at the highest rate of payment, it does not take into account the varying costs experienced by households in our society. The concentration of income inadequacy is in part due to the current structure of our social welfare system. Existing rates do not adequately support the MESL we discussed earlier. The existing system can underestimate that. We can see that exemplified, in particular, when the rate of means-tested welfare payments is being calculated for households with children that are headed by one adult. This can mean that the current system for determining social assistance is flawed on a comprehensive model to ensure social welfare supports for Ireland are fit for purpose. It relates a little bit to the previous point. In particular regarding these payments, the cost of disability should be borne in mind with regard to applying for the pension and disability allowance.

I will make two further points regarding two cases I came across recently. One involved somebody who was put over the limit very marginally by the fact that this person's adult children were paying a contribution. The children were back living with the parents and making a contribution to the running of the house, and that was treated as means. I am not sure how that would be put in legislation. I refer to people handing up money in the traditional sort of way. It is difficult. It was a family in which everyone was doing their best and trying to be fair and decent to each other, but it ended up with a reduction in the carer's allowance that was being provided. The other case is similar whereby somebody had gone over the threshold but will now be under the new threshold. I raised this with the Minister previously and asked whether it can be done operationally. Obviously, the Department needs to be careful in the circumstances in which it does this. We had the ability prior to child maintenance legislation to be able to not disqualify people who were applying on the basis of that part of their income assessment. Similarly, would it be possible operationally for people who are being reviewed at the minute and who fall between the old and new thresholds not to have their payments reduced during the course of the next six or seven months until the next increase in the disability payment?

Deputy Heather Humphreys

The Deputy raised that with me and I asked my officials to take a look at it. I have yet to hear back from them. I take the Deputy's point, however. When we have dates and limits, there will always be winners and losers. I particularly take the Deputy's point about the carers.

I am committed to a wide-ranging review of means testing in the Department. That review is ongoing and I hope to have it completed very early next year, at which point I will publish it and make it available to the committee. I prefer not to accept these amendments, if the Deputy does not mind, because, again, it is a question of putting the provisions into legislation. I promise him the committee will have the report on all these issues.

When I think about means testing, I always use the measurement that €20,000 used to buy a car but it would not buy a car now. That is the general rule for means testing. People are allowed to keep €20,000 and then the question is whether that should be changed. I always considered that sum to be the price of a car but that is no longer the case as a car costs a lot more than €20,000. We need to look at all these issues and I am committed to doing so. I was able to make some small changes. For people on a pension who want to rent a room in their house to a non-family member, for example, that income does not impact on their means-tested pension. That change is to help in providing more accommodation. People in that situation will likewise not lose their fuel allowance. We managed to ensure they keep that as well. We are trying to make improvements to make it easier for people. We are doing the full-scale review of all the benefits, after which it is a matter of implementing the new limits, whatever they may be.

Deputy Donnchadh Ó Laoghaire

Will that review be completed at the start of next year?

Deputy Heather Humphreys

Yes, I will have it at the beginning of the new year. It will be made public and I will provide it to the committee.

Deputy Donnchadh Ó Laoghaire

To clarify, will it be available in the first quarter?

Deputy Heather Humphreys

Yes, it will be published in quarter 1.

Deputy Éamon Ó Cuív

I hear what the Minister is saying about the review. We will have to see how granular it is. Some of the weirder anomalies are in the small print. For instance, non-contributory pensioners can have a job earning €200 a week but a self-employed person cannot have any income that is not assessed. Then it gets worse. I know a lot of three- to four-cow farmers in Connemara. The first €5,000 is not counted in respect of environmental payments under the farm assist scheme but it does count for the pension.

Deputy Heather Humphreys

No, we do not count it for the pension.

Deputy Éamon Ó Cuív

Is the €5,000 ignored?

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

Okay. However, people are only allowed to earn €30,000 and the penalty is 100% after that. Is that not correct? People get the first €30,000 of income but, after that, there is a 100% penalty. Unfortunately, many of these very small farmers do not keep all their receipts. The social welfare officers are fair enough and always take a certain amount of State payments at stated cost because it is obvious you could not have cattle without having some feed costs and whatever. This is a very severe rule on a very vulnerable group. Could some of the easier, smaller matters be changed by regulation or are they all set out in statute law?

Deputy Heather Humphreys

I do not know. I will have to wait until I get the review. If I can change something that is not going to cost a lot of money, there is no reason I cannot change it.

Deputy Éamon Ó Cuív

It will only cost the Minister in Connemara. There is no farmer that poor elsewhere.

Deputy Heather Humphreys

Yes, there are not that many people involved. With the Deputy talking about farmers and receipts, I am thinking back to the late former Deputy, Seymour Crawford, who was in my constituency before me. One day, a fellow came in to me with a big box of receipts and said they were his farm assist application. I looked at them and said, "What?" The man replied that Seymour used to do that for him. Seymour was still around then and I told the man to go out to Seymour and get him to add up the receipts. It literally was just a box of receipts.

Deputy Éamon Ó Cuív

I spend my life doing that for very small farmers.

Deputy Heather Humphreys

I know the Deputy does.

Deputy Éamon Ó Cuív

Furthermore, I have educated them to keep the receipts. I tell them to throw the receipts in a biscuit tin and bring it in to me.

Deputy Heather Humphreys

At least they keep them. A shoe box would work too.

Deputy Éamon Ó Cuív

At least if the farmer has the receipts, you can do something about it. This is hitting a very vulnerable group and there is really no money involved. Something I was made aware of is that even when the Minister raised the income limit on the fuel allowance very generously, there was still an issue. I was given some statistics recently in the reply to a parliamentary question, for which I was grateful, on how many people, in respect of the increase for a qualified adult, IQA, for example, were getting the full rate of whatever payment. For people caught by the means test, it is very vicious when they get caught and they incidentally put it in the bank accounts in two names rather than one.

Deputy Heather Humphreys

That is a difficult one.

Deputy Éamon Ó Cuív

This issue does not affect a huge number of people but for those it does affect, particularly if it is retrospective, it is fairly serious and painful. If they had only known how to operate the things legally, the problem would have been easy to avoid. Some of these changes could be done quickly, would not have huge cost implications and would make for a fairer system.

I am really looking forward to seeing the report. It will be great reading. If I have to go to Boston, Australia or somewhere like that, I will read the report on the aeroplane where nobody can get at me. That is a great idea. It would be very useful if there were some indication given in the report as to whether the changes would have to be brought about by regulation or by statute law.

Deputy Heather Humphreys

We can include that information.

Deputy Éamon Ó Cuív

A big, fluffy report that does not get down to specifics is not much good in this case. This is all about the detail.

Deputy Heather Humphreys

I accept that. We can include in the report whether changes can be done quickly. If I can do something quickly at very little cost, I am happy to do it. Sometimes, small changes can make a big difference. I brought in a change that we called Catherine's law, which was named for a girl in the west who had a disability and had won a scholarship, which meant she would lose her payment. We were able to allow her to keep the payment and continue her studies. It certainly improved her situation and her prospect of getting into full-time employment and eventually getting off the payment. Those sorts of changes help people.

Amendment put and declared lost.

An Leas-Chathaoirleach

We agreed to take a break between 1 p.m. and 2 p.m. Would members like to suspend now or take the next amendment?

Deputy Heather Humphreys

I am happy to continue but it is up to members.

An Leas-Chathaoirleach

The next amendment is No. 6 in the name of Deputy Ó Laoghaire.

Deputy Donnchadh Ó Laoghaire

I am happy to keep going.

Deputy Heather Humphreys

As am I.

An Leas-Chathaoirleach

Let us take amendment No. 6 and we can take a break after that

Deputy Heather Humphreys

I am happy to keep going and get through all the amendments.

An Leas-Chathaoirleach

We will deal with amendment No. 6 and then think about how hungry we are.

Deputy Heather Humphreys

There are not that many more amendments.

Deputy Donnchadh Ó Laoghaire

Yes, I am inclined to push on all the way through.

Deputy Heather Humphreys

I, too, am happy to push on.

An Leas-Chathaoirleach

In that case, I will ask members again at 2 p.m. whether we should take a break.

Deputy Donnchadh Ó Laoghaire

I would say we will be nearly done by then.

Deputy Heather Humphreys

Yes, and then we can have a long lunch.

Deputy Donnchadh Ó Laoghaire

I move amendment No. 6:

In page 11, between lines 24 and 25, to insert the following:

"Report on assessment of self-employed people in receipt of Blind Pension and Disability Allowance

21. The Minister shall review the way in which self-employed people including Artists and people employed in creative industries are assessed regarding Blind Pension and Disability Allowance and the impact that income threshold limitations and assessment of grants and awards have on these payments for those workers and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.".

This amendment is to do with assessment of self-employed people for receipt of the blind pension and disability allowance. If a person's spouse or co-habiting partner works, it can affect that person's eligibility. For PAYE workers, some of their income is not taken into account, but all the income of self-employed people is assessed under the means test. That can put people at a fairly significant disadvantage. Some who are self-employed have a very healthy income but others are not so well off. There might be artists or tradespeople, for instance, for whom the work is not there all the time and it is a case of feast or famine. The disregard that exists for income from employment should reasonably and fairly be considered for application also to the self-employed.

Deputy Heather Humphreys

My answer in this case is the same as for the previous amendment. This issue will form part of the review of means testing, which I will have for the committee at the beginning of next year.

We can look at it then. I do not know why we should treat self-employed people differently from employed people. We can have a look at it and it will be part of the means test review, if that is okay.

Amendment put and declared lost.

Deputy Donnchadh Ó Laoghaire

I move amendment No. 7:

In page 11, between lines 24 and 25, to insert the following:

“Report on extending the provision of Disability Allowance to agents in case of bereavement of child

21. The Minister shall review the rule regarding the continuation of Disability Allowance payment where a person is the collecting agent for their child who passes away and prepare a report on extending payment of the payment for six weeks in these circumstances in line with the provision made for payments such as Domiciliary Care Allowance and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.

This came up a bit earlier. Disability allowance can be paid from the age of 16. The circumstances that are most likely to occur is that the spouse, cohabitant or child of somebody in receipt of a disability allowance can receive the payment from six weeks after the death of the payment while the claimant is receiving the payment themselves. However, in a very logical set of circumstances where a collecting agent is the person receiving it, who is very likely the spouse, cohabitant or parent, it can be extremely challenging for them to get payment thereafter. If the person was receiving it themselves, it passes relatively seamlessly for those six weeks to the parent, spouse or co-habitant. If an arrangement had been put in place prior to that whereby an agent collected it on their behalf, it seems to be extremely difficult for that agent to continue to get it for the subsequent six weeks.

Deputy Heather Humphreys

I am familiar with this case. It is a case that arose last year. I spoke to the parent involved. I have sympathy for this particular instance where people do not get the payment and it is cut off straight away. It is fair to say a collection agent is only there to collect the payment for the actual recipient and they are not the intended person to get it. I absolutely understand the case where a mother was looking after a child who passes away. It does not happen in many cases. It is narrow enough where it happens. It is about getting the payment for the few weeks afterwards in the same way as a payment for a spouse or partner, whereby someone continues to get the payment where their spouse has predeceased them.

We need to look at this in the round throughout the social welfare system. We need to look at how we make the system more humane for people who suffer bereavement and make sure people know what they are entitled to. I am happy to ask the officials to examine this matter and complete a report on it. I will ask them to complete a report by June of next year. Is Deputy Ó Laoghaire happy to accept my word that we will do a report? We need to look at it. If Deputy Ó Laoghaire does not mind not putting it in the legislation, I commit, and it is on the record, that we will have a report by June 2024.

Deputy Donnchadh Ó Laoghaire

The Minister said that as though I had the power to put it in the legislation. I should wish to have that power.

Deputy Heather Humphreys

I know the Deputy does not. I am trying to work with him. I accept what Deputy Ó Laoghaire is saying and we do need to do something about it. We will have a report in 2024 without the need to put it into legislation, if that is all right.

Amendment, by leave, withdrawn.

Section 21 agreed to.

Sections 22 to 25, inclusive, agreed to.

SECTION 26

Question proposed: "That section 26 stand part of the Bill."

Deputy Éamon Ó Cuív

What is the purpose of this? What is change is being made to what is already there?

Deputy Heather Humphreys

Illness benefit is intended to provide an income replacement for insured persons during short spells of incapacity or illness when they cannot work because of a disability or medical condition. This amends the current legislation to ensure a person cannot be entitled to statutory sick leave and get illness benefit. We are making a change whereby we are increasing the number of days of illness benefit the employer pays from the first three days to the first five days. I am making this legislative change on behalf of the Department of Enterprise, Trade and Employment because it has responsibility for employment law. I do not want people to be getting two payments with illness payment and statutory sick pay. This is why I am changing it.

Deputy Éamon Ó Cuív

There is no limit on the duration of illness benefit.

Deputy Heather Humphreys

It is the normal two years. People get it for two years.

Deputy Éamon Ó Cuív

In the event of somebody being clearly ill but not ill enough to qualify for an invalidity pension, what happens after two years?

Deputy Heather Humphreys

That is it. If people cannot work, they should go on an invalidity pension.

Deputy Éamon Ó Cuív

But there is the way the invalidity pension is being treated now.

Deputy Heather Humphreys

There is an appeals mechanism. I am not changing anything in that. That is the way it is.

Deputy Éamon Ó Cuív

There is no exception. In the old days people could be on illness benefit for five or six years.

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

If people were clearly ill but not permanently ill, they qualified for a disability pension.

Deputy Heather Humphreys

That changed in 2009. I have not changed it since.

Deputy Éamon Ó Cuív

As you know, my view is, and I know the Department disputes it but I stand by it, it is a lot harder to get an invalidity pension than it was.

Deputy Heather Humphreys

I do not know whether it is harder than it was but it is not easy to get it.

Deputy Éamon Ó Cuív

Invalidity pension.

Deputy Heather Humphreys

People have to go through a fairly-----

Deputy Éamon Ó Cuív

Particularly for unskilled people. They are expected to be able to do jobs they are clearly not qualified to do.

An Leas-Chathaoirleach

That might be outside what we are providing for in section 26.

Question put and agreed to.

Sections 27 to 30, inclusive, agreed to.

SECTION 31

Question proposed: "That section 31 stand part of the Bill."

Deputy Donnchadh Ó Laoghaire

Section 31 deals with share options and employers' PRSI contributions. What is the situation? At what rate is the employer's PRSI contribution paid on share options at present?

Deputy Heather Humphreys

Share options in certain employment are seen as income. This is because people get preferential treatment.

I do not have the rate at which PRSI is charged off the top of my head. I am told it is the same rate as other income.

Deputy Donnchadh Ó Laoghaire

The Minister said it is in some occupations. It is not necessarily all, from what she said.

Deputy Heather Humphreys

This came in in the Finance Bill. It was decided there would be a charge on share options so I had to transfer it in to make sure the PRSI would be applicable to that as well, because it is seen as an income.

Deputy Donnchadh Ó Laoghaire

Rightly so. Does that apply across the board or are there exceptions? I know some of that relates to the Finance Bill but will PRSI be paid on, generally speaking, all share options from now on? How much will that generate?

Deputy Heather Humphreys

It provides that employed contributors born after 1 January 1958 who do not claim the contributory State pension between the ages of 66 and 70 are liable. The over-66s will have to pay it if they get share options, because they pay PRSI to get a higher pension when they retire. If you work longer, you get a higher pension. If they have to pay PRSI, we have to make sure they pay it on everything the same as everybody else. The payment of social insurance by over-66s who continue to work means their employers will be subject to employer PRSI. The share-based remuneration is predominantly associated with PRSI class A contributors and a 4% rate is paid. However, it may be applied to other classes, such as former public sector employees still on class D. We are trying to make sure anybody continuing on to increase credits and get a bigger pension is subject to the same rules as anybody under 66.

Deputy Donnchadh Ó Laoghaire

That is fine. Maybe I should know this but I am trying to understand what the picture is for the whole population. Will the Minister clarify that?

Deputy Heather Humphreys

Is that on the share option?

Deputy Donnchadh Ó Laoghaire

For the majority of the whole population, is employer’s PRSI paid on share options?

Deputy Heather Humphreys

Yes.

Deputy Éamon Ó Cuív

Section 31 amends section 13(4B) of the principal Act. Section 31 (a)(ii) states:

...being a person born on or after 1 January 1958 who has attained pensionable age but has neither attained the age of 70 years nor been awarded a State pension (contributory)[.]

That seems to imply that if you are earning €200 or €250 per week or another modest income and on a non-contributory pension, you automatically wind up paying PRSI even though it is unlikely to be of benefit to you.

Deputy Heather Humphreys

You will be paying PRSI only if you are not drawing down a contributory pension. If you are drawing an occupational pension, you will not be paying PRSI on it because I was of the view you paid it-----

Deputy Éamon Ó Cuív

What about a non-contributory pension?

Deputy Heather Humphreys

On the non-contributory pension, if you have a modest income you will not be paying PRSI, if it is under the threshold.

Deputy Éamon Ó Cuív

What if it is over the threshold?

Deputy Heather Humphreys

Then you have to pay it.

Deputy Éamon Ó Cuív

Why, if you are drawing a pension and have made your call, would you be paying PRSI? Why does it not say “nor been awarded a State pension, contributory or non-contributory"?

Deputy Heather Humphreys

Maybe my official will answer for me. It would be easier.

Acting Chairman (Deputy Marc Ó Cathasaigh)

It is not permissible for officials to answer. We have to pop into private session briefly if we want to take an answer from an official.

Deputy Heather Humphreys

That is okay. I will leave it.

Deputy Éamon Ó Cuív

Will the Minister come back to me between now and Report Stage.

Deputy Donnchadh Ó Laoghaire

My understanding is you stay on class J and pay no PRSI if you do not draw it down. Am I right?

Deputy Heather Humphreys

I will get the answer. If you are on a non-contributory pension and want to access the deferred pension, you can do that. We did not want to block people out of it.

Deputy Éamon Ó Cuív

It is a possible but unlikely scenario. Most people on non-contributory pensions would not jump up that far over four years.

Deputy Heather Humphreys

We did not want to block them out of it.

Deputy Éamon Ó Cuív

It will be very complicated for the employers.

Deputy Heather Humphreys

If they are on non-contributory, it is unlikely they will be liable for PRSI.

Deputy Éamon Ó Cuív

Maybe the Minister will get me a further briefing opportunity on Report Stage.

Deputy Heather Humphreys

I will speak to the Deputy offline on this afterwards. We will go through it in detail.

Deputy Éamon Ó Cuív

Okay.

Deputy Donnchadh Ó Laoghaire

I request the same note.

Deputy Heather Humphreys

We will give it to the Deputy.

Acting Chairman (Deputy Marc Ó Cathasaigh)

The Minister might revert to the committee as a whole.

Deputy Heather Humphreys

When we are finished here, we can go through it in detail. It is a simple enough explanation.

Question put and agreed to.

Section 32 agreed to.

SECTION 33

Question proposed, "That section 33 stand part of the Bill."

Deputy Éamon Ó Cuív

The number of voluntary contributors is small. There is a time limit within which it must be claimed. I think it is a year or two years.

Deputy Heather Humphreys

Five years.

Deputy Éamon Ó Cuív

It would be hugely helpful if, when somebody goes off work and is drawing jobseeker's allowance for whatever reason and making no contribution, that person is notified of the option so people would not come back years later saying they did not realise they could make voluntary contributions.

Deputy Heather Humphreys

We will, on foot of the Pensions Commission report – and it is the right thing to do – make it available to people to get a list of their contributions online. They can pick it up. We will not be sending it out but it will be available. We will encourage people to look at their contributions. There is no point in getting to age 66 and realising you have a lot of gaps. They can log in and see it, possibly on an app. We have not developed that yet. It means everybody can see clearly what their contributions are. If they see zeros, they would want to pay attention and make the voluntary contributions the years they are not liable for PRSI.

Deputy Éamon Ó Cuív

I agree, but when people leave employment and the system knows they are gone for a while, they should be positively told. I do not know the Minister’s experience but mine is that, while I find it easy to read contribution records, the date of birth is not on the new ones, which used to be very handy when somebody came in. Now you have to ask for the date of birth. On the other hand, the new layout is brilliant. It is much better. The one thing I would quibble with is the date of birth not being on it because everything relates to the date of birth.

Deputy Heather Humphreys

We will look at that. I do not know why it is not on it.

Deputy Éamon Ó Cuív

The point is an awful lot of people when they get the sheet do not understand it. Therefore, it would be important that people’s attention be drawn to the fact voluntary contributions are possible. Many people seem to come in too late in the day when they get to 66. I agree we have to get people to access contribution records. Not everybody within five or six years of pension age is able to access data like that on a computer. People use a computer for Facebook and all sorts of things but officialdom on computers is different and can pose challenges for people.

Therefore, I do not think it is simplest to presume that everybody knows, first, to access it and, second, how to access it on the computer, even though they might be using smartphones and such things for other purposes. Many people know how to do what they want to do but they do not necessarily know every way to do it. All we have to do is look at the number of people who queue for a licence that can be got online.

Deputy Heather Humphreys

That is fair enough. I do not know what kind of work that would involve for the Department so I will have to look at it. It might be a massive job for the Department to have staff sending out all of those letters, and then somebody will say, “The Department did not tell me so it is your fault, not mine.” The Deputy knows himself. In any case, we can look at it.

Question put and agreed to.

Sections 34 to 43, inclusive, agreed to.

SECTION 44

An Leas-Chathaoirleach

Amendments Nos. 8 and 9 have been ruled out of order due to a potential charge on the Revenue. Does the Deputy wish to make a short contribution even though they have been ruled out of order?

Deputy Donnchadh Ó Laoghaire

I will address amendments Nos. 8 and 9 when we reach amendment No. 12.

Amendments Nos. 8 and 9 not moved.

Deputy Heather Humphreys

I move amendment No. 10:

In page 22, to delete line 10 and substitute “5A;”.

Amendment put and agreed to.

Deputy Heather Humphreys

I move amendment No. 11:

In page 22, between lines 10 and 11, to insert the following:

“ ‘yearly average approach’ means the rate of State pension (contributory) to which a claimant would be entitled to on the basis of the claimant’s yearly average or alternative yearly average whichever is more favourable to him or her;”,”.

Amendment put and agreed to.

Section 44, as amended, agreed to.

NEW SECTION

Deputy Donnchadh Ó Laoghaire

I move amendment No. 12:

In page 23, between lines 23 and 24, to insert the following:

“Report in ensuring people aged 65 years of age have right to retire on State Pension Contributory

45. The Minister shall prepare and lay a report before the Houses of the Oireachtas on restoring the option on the right to retire for those aged 65 years of age on a State Pension Contributory and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.

We had a discussion on this only two weeks ago at the committee during the debate on the Estimates and the point has been well articulated in these Houses in the past two weeks. There has been a report on the Pensions Commission increases in PRSI for employers and employees. I think people would quite reasonably have expected the right to retire on a pension at 65, given the debate that took place, in particular during the previous general election and since then, supported by some of the trade unions and organisations representing older people. That is not to say everyone should need that or everyone wants that and, obviously, anyone who wishes to work should absolutely have that option, and whatever obstacles exist to that need to be removed. It is about having the choice. The Minister put it very well herself when she talked about the cleaner dragging a hoover up the stairs. That person might been working since they were 16 or 17 yet they have to stay at work at 65. There is the transitionary pension payment but, of course, that is paid at a lower rate and it is also means tested. If a person has a spouse who has a higher income, they might only get a portion of that or they might not get it at all, despite the fact they might have more than adequate stamps.

The detail of the current situation is not so much to the point I am trying to make, but the Minister herself said she recognises there is a need to look at the situation of people who are 65 and to look at the current payment. The Minister also said she does not particularly want reports in legislation and that is not my objective either, but for Opposition Deputies, putting forward amendments that impose a charge on the Exchequer is impossible. We need to move to this position. We need to support those who wish to keep working longer and incentivise them to do so, if possible, but there are many people in society who cannot continue to work to 66, much less 67 or 68. They should have the right to retire on a pension at 65 and that is what this amendment is seeking.

Deputy Heather Humphreys

We have just had the biggest report ever on pensions, which is the Pensions Commission report. I believe we have responded comprehensively to that in terms of retaining the pension age at 66, introducing the new flexibility to allow people to defer their pension, providing a pension to long-term carers and the small incremental increases in PRSI over the next five years, which will make the system more sustainable. We always said that, in keeping it at 66, because of the changing demographic, we would have to pay for that.

What we are trying to do is make the pension system more sustainable so the young people of today can get a pension when they retire. The system at the moment is pay-as-you-go and we pay for those who are pensioners now. That is the system that is there and it will continue. We have the benefit payment for 65-year-olds, and that is not means tested and someone can get it if they have their contributions.

Deputy Donnchadh Ó Laoghaire

My apologies, the Minister is right, but it is paid at a lower rate.

Deputy Heather Humphreys

Yes, it is paid at a lower rate but it is not means tested. There is a big difference in changing the State pension age to 65, because if we did that, it would cost somewhere in the region of €355 million a year, and that figure will grow every year due to an ageing population. To get clarity on one thing, is the Deputy’s position that everyone should get a pension at age 65?

Deputy Donnchadh Ó Laoghaire

Everyone who wishes it.

Deputy Heather Humphreys

Everybody should get it who wants to retire at 65.

Deputy Donnchadh Ó Laoghaire

Yes, if they want it.

Deputy Heather Humphreys

If we did that, it would cost another €355 million a year. It is going to be difficult to pay for it; that is the point. It is important to point out that when the old transition pension was there, many people did not qualify for it anyway because they needed a lot more contributions for it compared with the State pension. In fact, the old transition pension was not available for self-employed workers, which means many manual workers would not have got it.

I take the point that in the case of somebody who has a long work history and who is genuinely not able to work, we should try to do something for them. I am looking at it. However, it would mean that whatever I come up with, I will have to bring proposals back to Cabinet on it, and there is no doubt about that. I understand the position, particularly for the brickie who is not fit at 64 or 65 to haul bricks around. I know there are all kinds of new systems and so on, but it is still bloody hard work and that is the bottom line.

I said I would look at it and I will do so. On the basis that we have the Pensions Commission report, I do not propose to accept this amendment.

Deputy Donnchadh Ó Laoghaire

Like a lot of these matters, it is not so much a report I am looking for as for the Minister to do it, but I have to put down my amendment in that way.

Deputy Heather Humphreys

I accept that.

Deputy Donnchadh Ó Laoghaire

I gave an example last week of a floor-layer I know. I did not quite get it right in the Chamber last week but I was talking to him about the details again. He does a full week's work and he has to take the first two or three days off the following week. He is just not able for two solid weeks in a row and he is 63 so he still has a good bit to go as things stand. If the Minister is looking at that then I welcome that and would be happy to engage with it. If people are in a position to continue working they should do so and whatever incentives and measures need to be put in place to advance that should be looked at. Straight line increases, when they were first proposed, were a mistake, particularly for people like that. I am glad that has been reversed but people at 65 are still at that tipping point. That is the purpose of the amendment.

Deputy Heather Humphreys

I accept that this is the way the Deputy has to put these amendments in. My point is the pension age is at 66 and it cannot be reduced to 65 across the board because that would have huge cost implications. It would come to €355 million per year to change it, which is a lot of money, and that would increase as the years go on. For those specific cases the Deputy is talking about, the ones who genuinely cannot work, I will look at it.

Amendment put and declared lost.

Section 45 agreed to

SECTION 46

Deputy Heather Humphreys

I move amendment No. 13:

In page 25, to delete lines 23 to 27 and substitute the following:

“(a) in subsection (1)—

(i) by the substitution of the following paragraph for paragraph (a):

“(a) subject to subsection (3), that the claimant has entered into insurance at least 10 years before attaining pensionable age or deferred pensionable age, as the case may be,”,

and

(ii) in paragraph (c), by the substitution of “subject to subsection (6D), that the claimant” for “that the claimant”,”.

Amendment agreed to.

Deputy Heather Humphreys

I move amendment No. 14:

In page 25, after line 41, to insert the following:

“(c) in subsection (6A) by the substitution of “Subject to subsection (6D), in the case of” for “In the case of”,”.

Amendment agreed to.

Deputy Heather Humphreys

I move amendment No. 15:

In page 26, line 4, to delete “and”.

Amendment agreed to.

Deputy Heather Humphreys

I move amendment No. 16:

In page 26, between lines 4 and 5, to insert the following:

“(d) by the insertion of the following subsection after subsection (6C):

“(6D) Notwithstanding any other provision in this Chapter, the rate of State pension (contributory) payable to a claimant who attains pensionable age or deferred pensionable age, as the case may be, on or after 1 January 2025 shall be calculated as follows:

(a) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2025 and 31 December 2025, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 90 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 10 per cent,

whichever is the more favourable to that claimant;

(b) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2026 and 31 December 2026, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 80 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 20 per cent,

whichever is the more favourable to that claimant;

(c) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2027 and 31 December 2027, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 70 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 30 per cent,

whichever is the more favourable to that claimant;

(d) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2028 and 31 December 2028, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 60 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 40 per cent,

whichever is the more favourable to that claimant;

(e) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2029 and 31 December 2029, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 50 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 50 per cent, whichever is the more favourable to that claimant;

(f) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2030 and 31 December 2030, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 40 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 60 per cent,

whichever is the more favourable to that claimant;

(g) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2031 and 31 December 2031, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 30 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 70 per cent,

whichever is the more favourable to that claimant;

(h) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2032 and 31 December 2032, either—

(i) the age-referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age-referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 20 per cent, and

(II) the age-referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 80 per cent,

whichever is the more favourable to that claimant;

(i) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, between 1 January 2033 and 31 December 2033, either—

(i) the age referenced rate of State pension (contributory) payable to the claimant calculated according to the aggregated contributions method, or

(ii) the aggregate of—

(I) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the yearly average approach multiplied by 10 per cent, and

(II) the age referenced rate of State pension (contributory) payable to the claimant, calculated in accordance with the aggregated contributions method multiplied by 90 per cent,

whichever is the more favourable to that claimant; and

(j) in the case of a claimant who attains pensionable age or deferred pensionable age, as the case may be, on or after 1 January 2034, solely in accordance with the aggregated contributions method.”,

and”.

Amendment agreed to.

Section 46, as amended, agreed to.

Sections 47 and 48 agreed to.

NEW SECTION

An Leas-Chathaoirleach

Amendments Nos. 17 and 18 are related and may be discussed together. Is that agreed? Agreed.

Deputy Heather Humphreys

I move amendment No. 17:

In page 26, between lines 25 and 26, to insert the following:

“Amendment of section 113A of Principal Act

49. Section 113A of the Principal Act is amended, in subsection (3), by the substitution of “in accordance with the age referenced rate for age 66 years specified in section 111.” for “in accordance with the rate specified in section 111.”.

Amendment No. 17 provides for a consequential change to section 113A of the Act because of the introduction of pension deferral. This is to remove any ambiguity that an individual who automatically transfers from invalidity pension to the State contributory pension upon reaching the age of 66 will receive the age-referenced rate for age 66, as is the current practice. This recognises that the State pension age remains at 66 and the option to defer is a purely voluntary one.

Amendment No. 18 inserts the rates of State contributory pension for each of the relevant ages that a person can defer to. There will be five rates of payment for the State contributory pension, dependent upon the age a person is when he or she draws down his or her pension. These rates will be set out in the budget annually and based on actuarial factors, which will be reviewed every five years in line with the actuarial review of the Social Insurance Fund. Where the actuarial factors change based on any future review, a lead-in time to notify future pensioners will be provided.

Based on the January 2024 rate of the State contributory pension of €277.30, the increase rates to be set out in the Schedule will be as follows: €290.30 at age 67; €304.80 at age 68; €320.30 at age 69; and €337.20 at age 70. The increase for a qualified adult at each age will also be adjusted and this will be in line with the committee’s recommendation following pre-legislative scrutiny. Once a person claims his or her pension, he or she remains on that rate for life, subject to any budget changes, where the rate of increase will be enhanced by the actuarial factor relevant at the date of drawdown of his or her pension. For example, if the increase was 5%, any annual increase will also include an additional 5%. A person’s rate of payment will be the same regardless of whether he or she claims the pension from their birthday, that is, at the age of 67, or at any time prior to their next birthday, for example at the age of 67 and ten months.

Deputy Donnchadh Ó Laoghaire

I wish to check one or two things. I asked some of these questions at the briefing and I think I have it right but I want to double-check. Hereafter, when the budget is announced, there will be two primary sets of figures for the pension, namely, a rate for the 66-year-olds; and three different rates for the 67, 68 and 69-year-olds. Each of those people will follow a trajectory that would have been set from the point at which they deferred. That has all kinds of knock-on effects and somebody who comes into the system a year later starts on a different rate or is on a different trajectory, so it is all related. The level of the 5% increases are based on actuarial figures and that is reviewed every five years.

Perhaps I misunderstand how this works, so I hope to be reassured, but I have a slight concern that this is a fair bit of time, were there to be a rate of inflation like we had in 2022 or beyond that, as we have had in some countries. If something radical happens in the course of a five-year period where the actuarial factors are not being reviewed, could that lead to a situation where the value of the deferral and the percentage increases is lost against either inflation or the base rate? That probably is the case but I ask the Minister to outline how.

Deputy Heather Humphreys

The point is it is the base rate. If inflation goes up, that would be a budgetary decision for the Government of the day to increase the base rate and therefore the other rates, so it all depends.

Deputy Donnchadh Ó Laoghaire

It is pegged to the base rate, so once the Government keeps the base rate paced with inflation that will be addressed.

Deputy Heather Humphreys

We felt it was important to put in an actuarial review to keep it in check all the time.

Deputy Donnchadh Ó Laoghaire

The big stabiliser is the-----

Deputy Heather Humphreys

The base rate.

The option to defer will only apply to people turning 66 from January so the earliest anybody can qualify for the 67-years-old payment will be from January 2025 onwards. It means all of these rates will change again as part of next year's budget, and hopefully we will be giving more increases then.

I thought it was important that we would give that clarity to people who are considering deferring so they know what they will get. If people are going to work for another year, they want to know what they are going to get and what extra will be in it for them. We are doing this here to give them more flexibility and choice, and it will be up to the individuals themselves to decide what best suits their own circumstances. I know we have all met people in our own constituency offices who are short maybe two or three years, and they would dearly love that option to work on. If they are fit, and fit to work, they want to work on to get the full pension whenever they retire.

There is now the option that if one wants to work for an extra year and enhance one's pension, we will give them that choice. They will get a bigger pension if they want to work on and increase their contributions.

Amendment agreed to.

Sections 49 and 50 agreed to.

NEW SECTION

An Leas-Chathaoirleach

This is the insertion of a new section, which has already been discussed along with amendment No. 17.

Deputy Heather Humphreys

I move amendment No. 18:

In page 27, between lines 16 and 17 to insert the following:

“Amendment of Part 1 of Schedule 2 to Principal Act

51. (1) The Principal Act is amended, in Part 1 of Schedule 2 (amended by section 17), by the insertion of the following references after reference 3(a)(ii):

“

(b)(i) Age referenced rate for age 67 years (ii) Additional increase for a qualified adult who has attained pensionable age (c)(i) Age referenced rate for age 68 years (ii) Additional increase for a qualified adult who was attained pensionable age (d)(i) Age referenced rate for age 69 years (ii) Additional increase for a qualified adult who was attained pensionable age (e)(i) Age referenced rate for age 70 years (ii) Additional increase for a qualified adult who was attained pensionable age

290.30 - 304.80 - 320.30 - 337.20 -

193.40 66.90 203.00 70.20 213.30 73.80 224.60 77.70

46.00 - 46.00 - 46.00 - 46.00 -

54.00 - 54.00 - 54.00 - 54.00 -

22.00 - 22.00 - 22.00 - 22.00 -

10.00 - 10.00 - 10.00 - 10.00 -

20.00 - 20.00 - 20.00 - 20.00 -

(2) This section comes into operation on 6 January 2024.”.

Amendment agreed to.

Section 51 deleted.

Section 52 agreed to.

Schedules 1 and 2 agreed to.

TITLE

An Leas-Chathaoirleach

This amendment has already been discussed with amendment No. 1.

Deputy Heather Humphreys

I move amendment No. 19:

In page 5, line 10, after “and” where it firstly occurs to insert the following:

“for the phased transition to the total contributions approach in relation to the calculation of the State pension (contributory) and”.

Amendment agreed to.

Title, as amended, agreed to.

An Leas-Chathaoirleach

Pursuant to Standing Order 187(3), the clerk will report specially to the Dáil that the committee has amended the Title. Is that agreed? Agreed.

Bill reported with amendments.

An Leas-Chathaoirleach

Do members wish to put any final questions or make any comments on the Bill before we conclude?

Deputy Donnchadh Ó Laoghaire

I will be very brief. I want to flag an issue and, if possible, the Minister might give a brief response.

The point has been made to me that decisions taken with regard to other parts of the budget - that is, an increase in the minimum wage, which is welcome - have meant that the comparative advantage of the wage subsidy scheme has been a bit lost. It has not kept pace. I suppose that is the kind of thing that needs to happen in a discussion. I know the wage subsidy scheme was increased approximately 18 months ago but, if the minimum wage steps up the comparative advantage an employer has is lost to some extent, although maybe not dramatically. Was there much discussion back and forth on this between the Department of Social Protection and the Department of Enterprise, Trade and Employment? What are the implications of that, and was it considered to increase the wage subsidy scheme?

Deputy Heather Humphreys

All of these things are looked at. I will have to get back to the Deputy on the wage subsidy scheme. I am not sure on this and I do not want to give him a wrong answer.

Deputy Donnchadh Ó Laoghaire

It was increased about 18 months ago, I think.

Deputy Heather Humphreys

Yes, it increased, but the Deputy is saying because the minimum wage has gone up-----

Deputy Donnchadh Ó Laoghaire

Yes, if it cannot keep pace, it should be pegged to it realistically.

Deputy Heather Humphreys

The Deputy is right in what he says. We should be keeping pace on it. Let me come back to the Deputy to confirm that, as I do not have the information now.

Deputy Éamon Ó Cuív

I will be brief. I think more than 3.5 million people at any one time are benefiting from social welfare. That includes parents, and their offspring benefit if they are under 18. That is a huge number of citizens interacting with the social welfare system. When out canvassing you will hear people say, "I never benefited from social welfare". I say, "Do you have a child?", and they say, "Yes". Well, they did benefit then. I then say, "Do you hope to reach the age of 66?" That is the most expensive benefit of all, and of course they will benefit from it because the type of people who say that are inevitably working.

Social welfare is hugely important, and over the years there has been a lot of focus on the finance Bill. However, this Bill is equally important every year, and equally affects people's lives. I am very grateful to the Minister for coming into the committee. It used to be a case of just bursting through the legislation. It is better that we did it this way, with a proper debate. We can analyse the issues and we can also tee things up for the future. I want to express my gratitude to the Minister for coming in here, and her willingness to come in to the committee rather than doing it in a hurry in a plenary session, probably with a guillotine in the Dáil.

An Leas-Chathaoirleach

I would like to be associated with those comments as well. Has the Minister any concluding remarks?

Deputy Heather Humphreys

I thank the Deputies for their co-operation. In regard to social welfare, we all want to do our best here, genuinely, to try and help people. As Deputy Ó Cuív said, it is from the cradle to the grave. We impact on people's lives right throughout, and some people think the Department of Social Protection does not impact but the Deputy is absolutely right. It does, whether one has a child and gets child benefit, or whatever the reason, we are here to step in and help people when they need it. If they get that help, they can get back on their feet and on the road again. It is important that we look after those who have contributed all their lives by way of a pension.

It is a very important Department, and when I became Minister there were a lot of things I did not realise. We have responsibility for so many other areas. It is a big Department with more than 7,000 staff, more than any other Department. It is a good Department. Only this morning an employer who had been speaking to someone in the Department of Social Protection about some small issue - I do not know what it was - said he could not have met anybody nicer, that they were extremely helpful. It is nice to hear those stories and I want to acknowledge the work of all the staff in the Department.

I am glad to be in here because it is about how we can improve things. I thank the members.

An Leas-Chathaoirleach

I thank the Minister and her officials for assisting the committee with its consideration of the Bill.