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Pensions Reform

Dáil Éireann Debate, Tuesday - 30 November 2021

Tuesday, 30 November 2021

Questions (382)

Marc Ó Cathasaigh

Question:

382. Deputy Marc Ó Cathasaigh asked the Minister for Social Protection if there are plans to change or review the way the State pension (contributory) is calculated since the changes that were made regarding the total contributions approach in 2012; and if she will make a statement on the matter. [58359/21]

View answer

Written answers (Question to Social)

In January 2018, the Government announced an Interim Total Contributions Approach (Interim TCA) to calculate the entitlement of pensioners who reached state pension age on or after 1 September 2012 (i.e. those born on or after 1 September 1946) and who had a reduced rate pension entitlement based on post Budget 2012 rate bands. When the Interim TCA was introduced, it included provision for the HomeCaring Periods Scheme which fundamentally changed the entitlement of many who spent time out of the workforce caring for others. It, for the first time, acknowledged home caring periods prior to 1994. Those who have a 40 year record of paid reckonable social insurance contributions, subject to a maximum of 20 years of credits / homecaring periods, qualify for a maximum contributory pension payment where they satisfy the other qualifying conditions for the scheme. From April 2019, all new State Pension (Contributory) applications are assessed under all possible rate calculation methods, including both the Interim TCA and the Yearly Average approach, with the most beneficial rate paid to the pensioner.

The Pensions Commission was established in November 2020 to examine the sustainability of the State Pension system and the Social Insurance Fund, in fulfilment of a Programme for Government commitment. The Commission was an independent body comprised of knowledgeable and experienced academics, pension experts, members of civil society and representatives of workers and employers. The Commission has completed its work and its report was published on 7th October 2021. The Commission's Report, its Technical Sub-Committee's working papers, and submissions made to the Commission are available on the Commission’s website, pensionscommission.gov.ie.

The Commission’s Report is a comprehensive report that takes account of an assessment of various analyses of population, labour force and expenditure projections; an examination of international approaches; and responses to an extensive consultation process.

It has unambiguously established that the current State Pension system is not sustainable into the future and that changes are needed, and it has set out a wide range of recommendations in this regard.

The report has been referred to the Joint Committee on Social Protection, Community and Rural Development and the Islands and to the Commission for Taxation and Welfare for their views. I understand that both the Chair of the Commission, Ms. Josephine Feehily and the Chair of its Technical Sub-Committee, Ms. Roma Burke met with the Joint Committee on 17th November 2021. Officials from my Department also attended this meeting.

In the interests both of older people and of future generations of older people, the Government intends to consider the comprehensive and far reaching recommendations in the Commission’s Report very carefully and holistically. My officials will work over the coming months to examine each of the recommendations. The Commission's recommendations includes a full transition to a Total Contributions Approach (TCA) model and phasing out of the Yearly Average approach over a 10 year timeframe. In terms of the specific design of TCA, the Pensions Commission recommended that the current Interim TCA model should become the definitive TCA. My officials will also consult across Government through the Cabinet Committee system in relation to this.

I think it is really important that we complete that work before reaching conclusions. I intend to bring a recommended response and implementation plan to Government by the end of March 2022.

The State Pension is the bedrock of the pension system in Ireland. It is extremely effective at ensuring that our pensioners do not experience poverty. This Government is committed to ensuring that this remains the case for current pensioners, those nearing State Pension age and today’s young workers including those who are only starting their careers.

I hope this clarifies the matter for the Deputy.

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