Dáil Éireann Debate, Tuesday - 25 July 2023
739. Deputy Sean Sherlock asked the Minister for Social Protection how much the State contributory pension would have to increase by to provide a level of payment equivalent to 34% of average earnings; the total estimated cost; the estimated cost of a €53-per-week increase; and if she will make a statement on the matter. [36755/23]
View answerAs part of the Roadmap for Social Inclusion 2020-2025, Government committed to finalising an approach for the benchmarking and indexation of pension payments.
Last September, I announced a series of landmark reforms to the State Pension system. The measures are in response to the recommendations from the Commission on Pensions and represent the biggest ever structural reform of the Irish State Pension system.
As part of this, a smoothed earnings method to calculating a benchmarked/indexed rate of State Pension payments will be introduced as an input to the annual budget process and will be submitted to Government in September each year, commencing this year.
It references published CSO earnings statistics – calculating 34% of average earnings (excluding irregular earnings and overtime) - and also references the Harmonised Indices of Consumer Prices (HICP) to calculate a price-adjusted rate.
The cost to increase State pensions to provide a level of payment equivalent to 34% of average earnings (excluding irregular earnings and overtime), based on provisional Q1 earnings figures, is €332 million, based on a €9 increase in rates. This costing, as requested, does not take account of prices.
The estimated full year cost of increasing State pensions by €53 is €1,955.7 million.
The costs shown above are on a full year basis and are based on the estimated number of recipients in 2023. They include costs for State Pension Contributory, State Pension (Non-Contributory) and Widows Contributory Pension (Over 66). It should be noted that these costings are subject to change in the context of emerging trends and associated revision of the estimated numbers of recipients for 2024.
It should also be noted that these costings include proportionate increases for qualified adults and for those on reduced rates of payment, where relevant.
