Dáil Éireann Debate, Wednesday - 26 September 2018
57. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection the consultation that has taken place on the proposed changes to the qualifying criteria for the State pension (contributory); and if she will make a statement on the matter. [38896/18]
View answerIn the spirit of the Acting Chairman's latest injunction, the question is self-explanatory.
The idea of a total contributions approach, or TCA, to State pensions dates back to 2007, when the then Government published the Green Paper on Pensions to stimulate debate on the challenges and the options for the future development of Ireland's pension system. This included the policy to introduce the TCA model. The consultation process was lengthy, thorough and inclusive and involved regional seminars, a national conference and consultation meetings with sectoral interests, as well as many written submissions. The consultation informed the development of the 2010 national pensions framework, which set out the policy to introduce the TCA, indeed by Deputy O'Dea's party, which was in government at that stage. This approach was subsequently endorsed by the OECD in its review of the Irish pension system in 2013.
As the Government intends to introduce the TCA from 2020, I launched a public consultation on its design on 28 May.
This consultation is not about the policy concept or rationale, which has been well thought out, but the design and implementation of the TCA. My Department invited a range of sectoral interest groups and the media to the formal launch at which we provided, I hope, an informative presentation. More important, we hosted a series of workshops on the various aspects of the proposed reform and there was also a separate briefing for Members of the Oireachtas and their staff. The consultation was hosted on the Department's website and it was open to everyone to submit responses and make submissions.
The consultation lasted for over three months and we received almost 300 responses by the time it closed on 3 September. These responses are being examined and considered and we will publish a summary of the outcomes on the Department's website when that work is completed, and I will also let the Deputy know the details. The initial analysis shows the main areas of concern to respondents include the number of contributions required to receive a full pension, the amount of credited contributions that will be available and whether there should be a phase-in period for its introduction.
I thank all those who made submissions. I was at pains to ensure we did not just get representative bodies replying in an official capacity, given that is their job. I was keen to hear from the people who will be affected by this. In the main, we have received a substantial number of submissions from them and I am grateful for their co-operation.
First, on the 40-year baseline, the S stamp for the self-employed first came into being in 1988, which will make it difficult for the self-employed people who are now applying for a pension, or who will apply in 2020 after the new system comes into place, to qualify for the full pension. How wedded is the Government to the 40-year baseline? The Minister will be aware the national pensions framework document envisaged a baseline of 30 years.
Second, the system in place at present requires 520 paid contributions for a person to be considered for a contributory pension. Has there been any feedback on that aspect? Does the Government intend to stick with that or is it open to change?
On the first point, the issue was raised in a number of submissions. I am a told a Deputy made a similar submission, although I am not sure if it was Deputy O'Dea. I am conscious it is one of the matters that has to be considered before we make the final decision. Forty years is the norm for many pensions and it is the number that will be required under the TCA 2012 model. When the legislation is passed in regard to those affected by the 2012 rate band changes, the Deputy will be aware that as the class S contributions were only introduced in 1988, it will be challenging for many self-employed people to qualify for a full pension by 2020 if the number of contributions at the time exceeds 32. The early analysis from the consultation shows that, for some of those who responded, a more transitional model is preferred, whereby those qualifying in 2020 would have a lower bar than those qualifying in the later years and would have the opportunity to catch up by, say, 2028, given that the latter would have had more access to PRSI contributions than the people who were there beforehand. The Deputy will appreciate that I cannot pre-empt any of the deliberations we will have on the outcome. However, the reason we ask for submissions is to consider them exceptionally carefully.
With regard to the Deputy's other point, the number of paid contributions to qualify for the contributory State pension has increased over the years. The most recent increase to 520 was agreed and passed in legislation by the Deputy's party in government in 1997 and implemented in 2012. This was also raised in a number of submissions, including that made by the Deputy on behalf of his party. Again, it is something that will be considered in the context of the new proposals. Nothing is agreed until everything is agreed.
It is apparently the Minister's intention that if people reach the age of 66 before the total contributions system comes into full operation in 2020, and if they are better off under the old system than under TCA, they can opt for whichever system suits them better. How long will that option last? I take it that it will only apply to pensioners who become 66 before the TCA comes into operation.
There is a proposal for home caring credits to replace the current homemaker system. Will there be any difference? Will the same types of people be covered for credits under the new home carer system when compared to the homemaker system?
I cannot answer the first question as we have not made any decision yet. Again, it is not me who will be wedded to making the decision. It will be made mindful of all the submissions that are made. I want to ensure that when we introduce this next year or the year after in legislation, it will be with the agreement of all of us because we think it is the right thing to do for the generations to come, which might include myself and the Deputy. We will do it collectively and we will do what is in the best interest of pensioners going forward.
The homemaker's credit is outdated. Historically, it was only women who made homes and we all know that is not the reality of many people's lives today. It will be called a caring credit. It will not just be confined to children but will be extended to adults who may be looking after their parents or a sibling who might not be lucky enough to have good health. I want to ensure that people who are caring, and who are an invaluable resource not only to their families but to the State, are recognised and their contributions towards their State pension are fulfilled.
