Tuesday, 10 June 2014

Questions (87)

Joan Collins

Question:

87. Deputy Joan Collins asked the Minister for Social Protection her plans to address the unfair and disproportionate impact that the change to the PRSI bands has had on women's pensions and, in particular, low-paid female workers. [24126/14]

View answer

Oral answers (6 contributions) (Question to Social)

In April 2012 the pensions policy officer of the Irish Congress of Trade Unions, ICTU, met representatives of the Department of Social Protection and was informed that it accepted congress's assertion that those with an average number of 29 annual contributions stood to lose €1,500 a year for life from next September. This is a grossly inequitable cut which targets a section of the workforce and will adversely affect vulnerable workers, particularly women. We believe that when these workers realise what has been done, they will simply not accept the cut.

Some 33%, or €6.5 billion, of all expenditure incurred by the Department relates to pensions. The number on pensions is increasing by approximately 17,000 annually. In other words and as a result of demographic changes in society, an additional 17,000 individuals seek payment of retirement pensions each year. In 2013, for example, the Department was obliged to make provision for an additional €190 million as a result of the increase to which I refer.

In the context of women and social insurance payments, it is worth noting that the actuarial review of the Social Insurance Fund carried out in 2012 confirmed that the fund - owing to its distributive nature - provided better value for female rather than male contributors. The review also examined the changes to the contribution rules and the associated rates of payment which were to be introduced in September 2012. It found that those with lower earnings and shorter contribution histories would still continue to obtain the best value from their contributions.

The contributory State pension is a very valuable benefit. Therefore, it is important to ensure those qualifying have made a sustained contribution to the Social Insurance Fund during their working lives. The reform measures introduced to date are consistent with this goal. The contributory State pension is based on contributions paid and credited during the course of the pensioner's working life and, accordingly, those who had less attachment to the workforce qualify for lower pensions under the scheme. As the Deputy noted, new rate bands were introduced from September 2012. These additional payment rate bands more accurately reflect the social insurance history of a person and ensure those who contribute more during a working life benefit more from the scheme in retirement than those with fewer contributions. The social protection system provides alternative methods of supporting such pensioners who have been less attached to the workforce.

In April I tabled a question in which I asked the Minister to provide a rate band analysis of all State pension contributory awards since 1 September 2012, broken down by number of awards, gender and percentage of overall awards. Her reply contained a tabular statement which was detailed and showed that 27% of those in the 20-29 rate band were female and that 8% were male and that 9% of those in the 15-19 rate band were female, while 3% were male. I forwarded this information to ICTU and received a reply which thanked me for my interest in revealing it. ICTU pointed out at the time that these changes would impact unfairly and disproportionately on women, particularly low-paid female workers. It also protested, in the strongest terms, at the grossly unfair way the rise in pension and age entitlement had been handled. Congress intends to continue to fight on these issues. Those who represent workers are of the view that the Minister has, in terms of the change in the pension rate banding, discriminated against women, particularly those in receipt of low pay. She is going to be challenged on this matter in the future.

It is important to reiterate that €6.5 billion of all social welfare payments made by Department relates to pensions. The cost in this regard is increasing by €190 million each year as a result of the 17,000 additional people who claim pensions each year. As the Deputy is aware, the social protection system provides alternative methods in supporting pensioners who have been less attached to the workforce. These include the homemaker scheme, increases for qualified adults, widow's, widower's and surviving civil partner’s pensions which can be based on the PRSI record of the worker or the spouse and the means-tested non-contributory State pension.

The supports provided for pensioners have resulted in similar outcomes for male and female pensioners in Ireland, with poverty rates for women over 65 years being statistically the same or slightly lower than those for men.

My priority has been to fully maintain the maximum weekly rates of payments for pensioners. We have successfully done this in all the budgets I have been involved in, despite the fact that each year we have had to spend, happily, an extra €190 to €200 million on the significant numbers who arrived at retirement age in that year.

It is great to see 17,000 pensioners living longer and having a productive working life. However, the point I am making is that the Minister's changes in September 2012 disproportionately affected women, especially older women, and the evidence supports this.

I am saying to Deputy Collins that the independent actuarial review shows comprehensively that women actually benefit significantly from the social welfare system - in fact, more than men do. We do not have the time now to go into a detailed discussion of why this is so. I refer Deputy Collins to the actuarial review, which is on the Department's website. I am pleased to say that, as a society, we prioritise pensioners and payments to our pensioners. I have been able to sustain these despite the economic crash that the country has unfortunately experienced, and I will continue to do so.