Tuesday, 24 November 2020

Questions (567)

Claire Kerrane

Question:

567. Deputy Claire Kerrane asked the Minister for Social Protection the gross and net costs of not increasing the pension age to 67 years of age quantifying each of the various factors; the reason for each factor; the estimated savings on working age payments that would otherwise be enabled if the pension age were to be increased; and if the estimated net cost includes public sector pensions in tabular form. [38375/20]

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Written answers (Question to Social)

The Programme for Government “Our Shared Future” sets out how the planned increase in the State pension age next year will be deferred and it will remain at 66 years pending the report of the Commission on Pensions. The Government confirmed as part of its Budget 2021 measures that the required amendment to primary legislation (the Social Welfare Consolidation Act, 2005) will be brought before the Oireachtas later this year as part of the Budget Bill for enactment in advance of the 1st January 2021.

Based on modelling conducted in advance of Budget 2021, my Department estimated costings for retaining the State pension age at 66 year, in both 2021 and 2022. The gross extra costs were estimated at approx. €321 million in 2021 and approx. €653.5 million in 2022.

The net extra costs for 2021 are estimated at approx. €221 million in 2021. The 2022 full year extra cost of retaining the State pension age at 66 years is estimated to be approx. €453 million. The smaller amount in 2021 is due to a first year effect. The 2022 extra cost figure of €453 million is expected to rise year on year thereafter.

The estimates for net extra costs take into consideration PRSI receipts forgone, movements from other social welfare schemes, and secondary benefit entitlements including Fuel Allowance, Household Benefit Payment and Telephone Allowance. The estimates are based on current rates of payments and do not make any provision for rate increases.

The estimates do not include costs for public sector pensions. Policy issues in relation to public sector pensions are matters for my colleague the Minister for Public Expenditure and Reform.

A breakdown of estimated costs quantifying each of the various factors is in the following table:

Estimated Expenditure 2021

Estimated Expenditure 2022

€000

€000

Pensions

279,150

570,190

Household Benefits, Fuel Allowance + Telephone Support Allowance to 66-67 year olds

6,780

13,260

PRSI receipts forgone from 66 to 67 year olds

35,000

70,000

Gross Extra Cost

320,930

653,450

Less

Qualified Adult Payments

-5,800

-11,410

Working Age Income Supports

-35,940

-71,750

Working Age Employment Supports

-1,570

-3,130

Illness, Disability and Carers

-56,970

-113,790

NET Extra Cost

220,650

453,370

It should be noted that the above estimates are subject to change in the context of emerging trends and associated revisions of the estimated numbers of recipients.

I hope this clarifies the matter for the Deputy.