Dáil Éireann Debate, Thursday - 3 February 2022
59. Deputy Gary Gannon asked the Minister for Social Protection if her attention has been drawn to the kinds of different results the total contribution approach produces for many retirees; if her Department has conducted a study of the implications of the total contributions approach for levels of pensioner poverty in Ireland; and if she will make a statement on the matter. [5487/22]
View answerThe 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. It was an independent body comprised of knowledgeable and experienced academics, pension experts, members of civil society and representatives of workers and employers. Once it completed its work and fulfilled its obligations, the Commission was dissolved. The Commission's Report was published on 7th October 2021. The report, Technical Sub-Committee's working papers and submissions made to the Pensions Commission are available on the 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 - including the full transition to a Total Contributions Approach (TCA) model of pension rate calculation and migrating from the yearly averaging model on a phased basis over 10 years rather than in a single step.
There is a chapter on TCA in the Commission’s Report which includes a section covering Gender, Equality and Poverty Proofing. The report states that a TCA arrangement results in a fairer and a more transparent system, as the person’s lifetime contribution is reflected in the State Pension (Contributory) benefit received. One of the purposes of the full move to TCA and the abolition of the Yearly Average approach is to address the anomalies that arise with the Yearly Average approach, whereby people with fewer contributions can access a higher rate of State Pension (Contributory) payment. Moving fully to a TCA arrangement would remove these anomalies. In addition, the report notes that the State Pension (Non-Contributory) and the Increase for Qualified Adult (IQA) payment will continue to provide a safety net to pensioners with limited means.
In the interests both of older people and future generations of older people, the Government intends to consider the comprehensive and far reaching recommendations in the Pensions Commission’s Report very carefully and holistically. The report has been referred to the Joint Committee on Social Protection, Community and Rural Development and the Islands. That Committee published its views yesterday. I and my officials will obviously include these in our deliberations over the coming weeks. Separately, as set out in its terms of reference, the Commission on Taxation and Welfare is considering the report of the Pensions Commission in the context of its review of potential changes to the social insurance system.
My officials are examining each of the recommendations and consulting across Government through the Cabinet Committee system. I think it is really important that we complete that work and get those views before reaching conclusions. I intend bringing 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 matters for the Deputy.
