Vol. 467 No. 3
8 Mr. N. Ahern asked the Minister for Social Welfare if he will introduce a system whereby persons with 40 years paid rather than credited PRSI contributions could qualify for full contributory old age pensions or qualify for full old age pensions plus 33? per cent, whereby the resulting vacancies would be filled by young workers under 25 years; and if he will give the estimated annual costs of each of these options. [11413/96]
The introduction of a system whereby an old age contributory pension would be paid to persons with 40 years paid contributions could lead to persons qualifying for such a pension from the age of, say, 57 onwards. This would have major financial implications, as would the Deputy's proposal to pay an extra 33? per cent in those cases.
The cost of reducing the pension age for old age contributory pension by one year, for example, is estimated at £30 million per annum. In addition, there is no certainty that vacancies created on foot of such a proposal would be filled by workers under 25 or that they would be filled at all.
As a part response to demographic changes and to reduce future pension costs on foot of these, measures have been taken to increase the official age of retirement in the coming years in some EU member states, for example, Germany, Greece, Italy, the UK and Finland. In all cases, a major aim has been to bring the retirement age for women into line with that of men in conformity with equal treatment provisions, though this has been achieved by increasing the former rather than reducing the latter as was envisaged a few years ago.
The National Pensions Board in its final report, Developing the National Pension System, considered, in principle, that a standard qualifying age of 65 for retirement and old age pensions should be introduced but regarded this as a low priority. It considered that there was only limited scope for offering pensions on a cost neutral basis at earlier ages and recommended that this could only be an option where the person who takes early retirement has other income or earnings. Accordingly, I have no plans to introduce an approach along the lines suggested by the Deputy.
There are no costings available within my Department for the options outlined by the Deputy.
I am trying to make two basic points on behalf of workers around 60 years of age who are finding the going a bit tough and would like to retire with dignity because their health is suffering and they feel they have made their contribution to society. Does the Minister have any figures for the number of persons with 40 years paid rather than credited contributions? The categories I have in mind include manual workers such as barmen who have to work unsocial hours. I am sure the Minister is conscious of the fact that in recent years workers have been seeking a redundancy package from their employer, more or less selling their job. This is a bad development.
By implication the answer to the Deputy's question is contained in the final sentence of my initial reply which reads: "There are no costings available within my Department for the options outlined by the Deputy". This implies that we do not have the statistics he is seeking for the numbers of persons in the 57-60 age group with 40 years service. It may in theory be possible to find the figures but the time it would take would not be justified.
The question relates to persons who would like to retire but would not have an occupational pension which would allow them to do so with some comfort. This is a problem that will grow because of demographic changes. The proportion of elderly people continues to grow compared to the numbers in the economically active age groups. It would be foolish, therefore, to follow the example of other countries and lower the retirement age to 60. Most are now seeking to push it back up again.
The problem cannot be solved by the Department in relation to social welfare pensions. One could not confine it in the way the Deputy is suggesting. It would cost about £30 million to reduce pension age by one year. This allows for the possibility that some of the people concerned are already in receipt of unemployment benefit or assistance or a preretirement allowance.
Some of the people I am talking about may be able to draw on a small occupational pension. If they decide to take redundancy, they will receive unemployment benefit for 15 months. They may then find that they will be excluded from receiving unemployment assistance because of their occupational pension. I accept that the matter raised in the first part of the question could not be included as a rule but the matter raised in the second part could be targeted and limited as it would be linked to the employment of a young person.
The problem lies in ring-fencing any such initiative. The Department is coming under pressure from self-employed persons who from 1988 have been paying PRSI contributions and because they will reach retirement or pension age before the ten year contribution period is up, they are seeking a pension without having paid the full ten year contributions. Once an initiative is introduced there are all kinds of pressures. The only solace I can offer the Deputy is that we are actively reviewing the report of the National Pensions Board. It is intended to introduce some initiative in the pensions area in the social welfare Bill next year but I cannot at this stage indicate what that might be.
