Dáil Éireann díospóireacht -
Tuesday, 24 Apr 2012

Vol. 762 No. 3

Topical Issue Debate

Pension Provisions

Deputy Tom Hayes

I thank the Ceann Comhairle for allowing me to raise this important matter. As the Minister of State is aware, the qualifying age for both the contributory and non-contributory State pension currently stands at 66 years. However, the qualifying age is due to rise to 67 years in 2021 and 68 years by the year 2028. These increases are not unexpected nor are they all that surprising, given the longer life expectancy. In addition, there is expected to be an increase in the number of retired citizens compared with numbers in the workforce over the coming years. Therefore, it is important that the State has substantial financial policies in place in advance of this shift.

The Minister of State will also be aware that under the Social Welfare and Pensions Act 2011, the State transition pension will no longer be paid after 1 January 2014. The purpose of the State transition pension is to help those people who are being forced into retirement at the age of 65 years, too early to receive the State pension which is available to them at 66 years. I ask the Minister of State what assistance will be available to those who continue to be forced into retirement at the age of 65 years, particularly as the qualifying age for the State pension begins to rise. Is consideration being given to outlaw the practice of mandatory retirement?

The decades-old practice of forcing workers to retire at the age of 65 years needs to come to an end and this is what will happen. Government social welfare policy mirrors that belief but I am concerned we have fallen short in legislating for this change in other areas. Countless employees in this country are currently operating under contracts that permit their employers to force them into retirement once they hit the age of 65. The outlawing of this practice would ease the concerns of the people facing this situation and it would reduce the overall financial burden on the State by increasing the tax intake resulting from extended working lives. I am sure the Minister of State will agree that if a 65 year-old man or woman were to lose his or her job through forced retirement, it would prove very difficult for them to find further employment. These people are entitled to apply for social welfare payments such as jobseeker's allowance but this is not a realistic solution.

We are not the first country to face this problem as the UK announced last year that the default retirement age of 65 years was to be phased out. This change means that employers will no longer be allowed to dismiss staff on reaching the age of 65 years. I understand that exceptions may need to be made for certain occupations, particularly those involving a great deal of physical effort. I look forward to hearing the Minister of State's views.

Deputy Minister of State at the Department of Health ( Róisín Shortall)

I thank Deputy Hayes for raising this matter. Members will be aware of the recent and upcoming changes to the State pension provision which have been announced. I take this opportunity to explain on behalf of the Minister for Social Protection her reasons for making these changes.

As Irish society has changed, pensions policy has evolved to reflect these changes. A key focus has been to ensure that the State pension is sustainable in light of demographic changes. This is compounded by the wider need for sustainable public finances.

The Government's primary consideration in making these changes has been to ensure that the system is on a financially sound and sustainable footing. Ireland is not alone in this regard as all ageing societies in the West face a similar challenge. The OECD put it well when it stated, "Policy-makers are facing the challenge of providing a short-term response to the crisis without losing sight of the longer-term structural reforms needed to put pensions on a solid foot in light of population ageing". In this context, the Government has asked the OECD to examine current pensions policy to ensure that it meets the needs of future generations.

The actuarial review of the Social Insurance Fund will be published in June. The scheme is in deficit to the tune of €1.5 billion so there will be a significant challenge in putting our social insurance system on a sustainable footing. This will be an important base line for the assessment of the sustainability of all social insurance schemes, including the State pension contributory.

We cannot overstate the challenges facing the Irish pensions system. The population share of those aged over 65 years and over is expected to more than double between now and 2050. People are living longer and healthier lives, with average life expectancy set to rise even higher in the future, at up to 88 years for women and 83.9 years for men. The number of older people is increasing. A total of 11% of the population is currently over 65 years and this is expected to increase to 22% to 26% in the period 2050 to 2060. The period for which an average pension will be paid will be greater than the period for which a pension is paid currently.

In contrast, over the same period, the proportion of the population who are of working age is expected to decline from approximately 68% to 58%. There are currently six people of working age for every pensioner and this ratio is expected to decrease to less than two to one by mid-century. Therefore, the task of financing an increasing pension expenditure will fall to a diminishing share of the population who are working. State expenditure on pensions will increase from approximately 8% of GDP in 2010 to almost 12% in 2060.

The central objective of the Minister for Social Protection is to reform the system so that it is viable in the future. If we are to deliver on the social contract to those in retirement, we need people to remain in work for as long as possible so that we can provide the necessary retirement supports. The abolition of State pension transition in 2014 will go some way towards this objective. Under current rules, the recipients of State pension transition are not permitted to be in full-time employment. The vast majority apply for the contributory State pension at age 66 years. There are almost 300,000 State pension contributory recipients compared to 12,000 State pension transition recipients, many of whom have come from other social welfare schemes. The standardisation of the State pension ages at 66 years may allow more people to remain at work as there is no barrier to work for those in receipt of State pension at 66 years.

Deputy Tom Hayes

I thank the Minister of State for her comprehensive reply. This is an issue that must be dealt with and the Minister of State has outlined the position that the OECD is to examine the current pension policy. I ask that the needs of many people be taken into consideration in that examination. I am happy with the details the Minister of State has given. If we could get those type of detailed answers to many other questions it would make our lives as public representatives a lot easier. I thank the Minister of State for getting that information.

Deputy Róisín Shortall

I will be happy to pass on the Deputy's comments to the Minister for Social Protection.

Nursing Home Repayment Scheme

Deputy Billy Kelleher

I welcome the opportunity to speak on this issue. The difficulty last year was that funding for the fair deal nursing home scheme ran out. It was suspended last June or July creating uncertainties. Admittedly, a further €50 million was put into the scheme by the Exchequer to ensure it would not run out of funding. A review is currently under way but reviews by extension lead to uncertainty. I am concerned this review could drag on for a long period and, therefore, I want to get clarity on what the review will entail. Is it just a value for money review or is it an overall review of the scheme? Is it an overall review of how we fund care for the elderly in our communities and society generally.

As a practising politician, the Minister of State knows the anxiety and concern among people about how they will fund long-term residential care for their elderly loved ones. Filling out application forms for such subventions years ago put huge stress and strain on families while eating into their savings. In some cases, their basic ability to function as a family was undermined by funding long-term residential care for relatives.

While there has been some criticism of it, the fair deal scheme has been transformative in removing uncertainty. People now know a place will be available for their loved ones when they need long-term residential care. I am concerned, however, that this review will undermine the good work that was done in the context of establishing the nursing home support scheme and all that stemmed from it.

While this is not a criticism of the Minister of State or her ministerial colleague, Deputy Kathleen Lynch, is there an ideological issue concerning private nursing homes? Such homes can make a contribution in delivering health care and long-term residential places. The reduction of 630 private nursing home beds will have a huge impact because there has been no increase in home support schemes or home care packages. People will not be able to move from the acute hospital sector to an intermediary step-down facility and perhaps on to long-term care, if required.

A large capacity is being taken out of long-term stay beds, but there is no indication from the Department or from the HSE about how they will find long-term residential accommodation for those who require it. The demographic increase in our elderly population means that in the short to medium term this issue must be addressed once and for all. Is the fair deal nursing home review fundamentally a value-for-money review or is there a broader remit to the review group in terms of how we fund such facilities and how we will care for the elderly in future? Ultimately, the fair deal nursing home support legislation is primary legislation which will have to return to the Dáil for discussion if any amendments are made to it. The legislation must be effective, quick and we must ensure it does not undermine people's confidence or increase anxiety among those considering long-term residential care or nursing home care.

Deputy Róisín Shortall

I thank Deputy Kelleher for raising this issue. The nursing homes support scheme will have been three years in operation in October and is on schedule to be reviewed this year. The scheme was introduced in 2009 with the commitment to review its operation after three years. The reason for allowing this period to elapse is to ensure that trends and statistics will be available to inform the work. The review is now on schedule for this year and is in the course of preparation. Among other issues, the review will examine the ongoing sustainability of the scheme; the relative cost of public versus private provision; the effectiveness of current methods of negotiating price in private, and setting price in public, nursing homes; and the balance of funding between residential and community care. As the Deputy can see, the review is wide-ranging. The views of relevant stakeholders will be considered as part of the review. Planning and terms of reference for the review are being finalised at present.

The nursing homes support scheme provides financial support to people who have been assessed as requiring long-term nursing home care. Applicants to the scheme undergo a financial assessment to determine how much they will contribute towards the cost of their care each week, and what portion of the cost the HSE will meet. The scheme is resource capped. In this regard, the total gross long-term residential care budget in the current year is €994.7 million. This is effectively funding for the nursing homes support scheme, albeit that transitional arrangements - that is, subvention, contract beds and people who were in public nursing homes prior to the introduction of the scheme - must be also facilitated from within the subhead.

Additional funding of €55 million was originally allocated to the scheme for 2012. However, the Minister for Health subsequently decided to transfer €13 million of the €55 million for a pilot scheme of increased and targeted community care interventions in 2012. The decision on the transfer of funding was taken following analysis of a report into the care needs assessment process which determines whether a person requires long-term residential care. The report was based on an audit of 1,200 persons in long-term residential care. It found, among other things, that while in 93% of the cases long-term residential care was recommended, in 40% of the cases the individuals were not considered for interventions such as home care packages. In a further 40% of the cases it is not clear if they were considered for such packages.

This report will now also form part of our consideration for the wider review now being planned. The special delivery unit is working with the HSE to ensure intermediate facilities and options are available to older persons with the overall objective of ensuring that as many people as possible are empowered to remain in their homes for as long as possible in line with their wishes and Government policy.

It is therefore a wide-ranging review but that is not to take from the success of the scheme itself. If we find that significant numbers of people are in long-term nursing home when they would prefer to be at home in supported housing with home help, we need to move in that direction. Given the way the system currently operates, it incentivises the residential aspect of care rather than the community setting, which is most people's first choice.

Deputy Billy Kelleher

I thank the Minister of State for her reply. I know she does not have direct responsibility for the scheme but she has a broad knowledge of it. I have no difficulty with a review that seeks savings, efficiencies and competitive tendering between public and private suppliers. I hope that is carried out speedily and efficiently but I cannot reconcile the fact that the HSE's national health service plan proposes to take 1,000 beds out of long-stay residential care. On the one hand, we are talking about a review while on the other we have already made a decision that up to 1,000 beds will be taken out of the system. Could we not have had the review in advance of the HSE making that determination in the context of providing health care? Population demographics mean we will require further investment in long-term residential care, which everybody accepts, but the opposite is happening.

We should have an increase in the number of people who are assessed for home care packages to see if they can reside at home with supports. The problem, however, is that home care packages have not been increased and home-help hours have been reduced. In addition, out-of-hours GP services are being curtailed but such services are essential for elderly people who wish to reside in their communities.

This review is examining the fair deal scheme in a narrow and focused manner. The review is a whitewash to make savings without examining broader issues. If the review examined broader issues the closure of 1,000 community nursing home beds would be shelved until the review reported its findings.

Deputy Róisín Shortall

I want to make it clear that this is not about saving money. It is an important part of the review, however, to ensure we are getting value for money by examining, for example, the relative costs of private versus public nursing home care.

We do not have hard figures on this so we need to find out why there are differences and what they mean. We cannot ignore a situation where 40% of people in nursing home care were not offered any alternative and would probably be better off in supported housing in their local community or in their own home with home help and other services. On a policy level we want to ensure as far as possible people are enabled to live in their own homes for as long as possible and if this is not possible there should be a supported arrangement. This is one of the reasons the Ministers of State, Deputies Kathleen Lynch and Jan O'Sullivan, will meet to examine the potential for developing supported housing through local authorities. The fair deal scheme has been successful but there has been too much emphasis on it being the only option available to older people who need support. It is right from a policy perspective to explore other options which are more in the interests of older people and which would meet their needs as expressed, which is to stay in one's own home for as long as possible and if this is not possible to at least stay in the local community.