Joint Committee on Social Protection, Community and Rural Development and the Islands díospóireacht -
Wednesday, 10 Apr 2024

Impact of Means Testing on State Pension and Other Social Welfare Schemes: Discussion

An Cathaoirleach

Members are required to participate in the meeting remotely from within the Leinster House precincts only.

I welcome the witnesses. Wtinesses are protected by absolute privilege in respect of the presentations they make to the committee. This means that they have an absolute privilege against any defamation action in respect of anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty as Cathaoirleach to ensure that this privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity they will be directed to discontinue their remarks. It is imperative that they comply with any such direction. Witnesses are reminded of the long-standing parliamentary practice that they should comment on, criticise or make charges against any person or entity by name or in such a way as to make him or her identifiable or to otherwise engage in speech that might be damaging to the good name of a person or entity.

Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person or entity outside the Houses or an official either by name or in such a way as to make him or identifiable.

The committee will now consider the impact of means testing on the State pension and other social welfare schemes. This is the first meeting in a series that the committee intends to hold on the theme of means testing within the social welfare system. The committee is interested in the consequences of means testing and its future application across schemes. The committee is aware that the Department of Social Protection is undertaking a review of this topic at the moment and the committee looks forward to seeing the results of this review and collaborating with the Department on a system that will be equitable for all.

I welcome to the meeting the following witnesses: from ALONE, Mr. Seán Moynihan, chief executive officer, Ms Gráinne Loughran, senior policy advocacy officer, and Mr. Frank Dillon, head of communications and fundraising; from the Irish Senior Citizens Assembly, Ms Niamh Kavanagh, membership development officer, and Mr. Pat Mellon, national co-ordinator, who will be joining us shortly; and from Age Action, Dr. Nat O'Connor, senior public affairs and policy specialist, and Ms Mary Murphy, research officer, who will also be joining us shortly.

I now invite Mr. Moynihan to make his opening statement.

Mr. Seán Moynihan

I thank the Chair and the committee members for inviting us today. In 2023 ALONE provided support to over 36,000 older people, 12,000 of whom were new to our services. The number of support interventions we provided in finance almost doubled in 2023 compared to 2022. Approximately 2,775 people newly assessed by ALONE indicated that they had issues with finance. Among them almost half the issues were about benefits and entitlements. ALONE has actively campaigned for over ten years to have the State pension and other social welfare payments benchmarked and we are happy to see them included in the roadmap for social inclusion. The lack of progress in delivering this remains somewhat frustrating. This is needed for the older people who solely rely on the State pension and live in or are in constant threat of poverty while their housing and other costs spiral. These people form the majority of whom ALONE works with everyday.

Generally issues with benefits and entitlements mean that people do not know they are entitled to a particular support and-or need assistance to fill out forms to access the support. Often older people approach us because they are in financial difficulty and it emerges that they are not receiving what they are entitled to. By the time an organisation like ours supports them to secure these benefits they are often in dire need.

In addition to asking the committee to hold the Government to account for this promise, we will additionally highlight three issues with means testing that prevents older people from accessing vital supports. They are: how means-testing and various eligibility criteria add to the complexity and inaccessibility of the social welfare system; the inadequate communication of changing means thresholds for social welfare supports; and, finally, how household means testing can result in ineligibility for supports that people are entitled to.

First, one of the major impacts of means testing is that older people simply do not know that they qualify for certain payments because they are not universally supplied. It is not written on an application for your pension that there may be other benefits that you are entitled to and you do not receive a letter in the post to tell you that the eligibility criteria for supports has changed.

Often people assume they do not qualify for additional supports even when they are experiencing severe financial difficulty. The social protection system is not designed for accessibility with older people in mind. In fact, often it throws up barriers to people accessing support. The range of supports available from the Department of Social Protection and other Departments all require different forms. Some have means tests while some do not. The means eligibility varies. Some are applicable at different ages and the applications are sent by many organisations and Departments. In addition, supports that appear similar to someone not used to them also have very different criteria.

The complexity prevents older people from accessing supports for which they are eligible. It has a severe impact on older people with lower literacy and numeracy skills, including digital literacy, who are now primarily directed to welfare.ie for information and it also severely impacts older people living alone who may not have a family member to advocate for or support them with these complex tasks. Both of these cohorts are likely to experience poverty and social exclusion anyway and they are doubly excluded by the complexity of applying for support.

Second, when the income thresholds change for increases, it is not sufficiently communicated by the Department. We saw this, for example, when the income threshold for fuel allowance was increased. Thousands of older people who were expected to become eligible for fuel allowance after these changes are still not claiming it.

Third, the means testing is calculated based on household rather than individual income. We see a negative impact resulting from this, for example, in cases where older people have been unable to access fuel allowance due to adult children moving back into their parents' home, often to save for a housing deposit, bringing their household means above the means threshold even though the adult child may not be contributing.

In addition, the means testing for the non-contributory pension for couples sufficiently impacts individual autonomy and independence in older age, not to mention financial security. For example, we are working with a woman in her eighties who lives alone in the west of Ireland. She cannot access the non-contributory pension in her own right as her husband's pension puts her significantly over the means test, even though a significant proportion of that income goes towards her husband's nursing home fees where he moved last year. Having applied earlier last year, she was denied the non-contributory pension, the living lone allowance and the carer's contributory pension. This case highlights many issues with the State pension system, including the lack of support for carers, lack of independence provided for women who work in the home and the unfairness of means testing for the non-contributory pension.

To conclude, if the point of means testing is to limit eligibility and reduce the cost to the State, you can imagine this has been achieved significantly through means testing in its current form, due to the significant administration costs accrued. Furthermore, it prevents older people from accessing supports they are eligible for and otherwise should be entitled to. In ALONE's view that streamlining of eligibility criteria and the reducing of the levels of means testing used across entitlements available from this Department should significantly impact older people in the ability to know and access the supports they are entitled to while reducing the administrative cost burden. This should also be achieved through initiatives such as benchmarking the State pension and ensuring universal accessibility.

I thank members for this invitation and their time today. I am happy to answer any questions.

An Cathaoirleach

I thank Mr. Moynihan and invite Dr. O'Connor to make his opening statement.

Dr. Nat O'Connor

I thank members for the opportunity to present to the committee. Age Action regularly caries out surveys and focus groups on older persons and many of them are concerned about means tests such as, for example, the means tests for the non-contributory State pension, the over-70s medical card, local authority housing grants, social housing, housing assistance payments, fuel allowance and the telephone allowance, as well as for a person's spouse or partner to receive an income such as the increase for qualified adults and the means test to access the nursing home support scheme. Ireland uses means-testing for more than a fifth of spending on social protection, that, is, 21.3% or twice the EU average of 10.9%. Inflation has cut the real value of income, meaning that eligibility for many welfare schemes and other supports is far stricter now than it was just four years ago. Most means tests have not changed since before 2020 despite cumulative inflation projected by the Government to be over 20% in the period from 2020 to the end of this year. There is no cross-departmental co-ordination even when the Department of Social Protection indicates likely changes to the weekly welfare rates. There is no process to automatically adjust means tests in other Departments. When welfare goes up without changes to means tests, hundreds if not thousands of people lose eligibility for vital supports.

There are cliff edges in the rules where a person who is €1 a week over the eligibility threshold gets nothing whereas somebody on €1 less per week may get a supplement or a service that is worth far more than the €52 that separates their income from the person who got nothing. There is a need for partial rates for supports like the fuel allowance to reduce these cliff-edge scenarios. People living alone who often are women have more than half of the costs faced by couples and while poverty is concentrated among older people living alone, means tests often do not provide a more generous eligibility criteria for them. We sent a detailed submission to the committee on the means test for qualified adults to the State pension known as the IQA. In that submission we argued that the whole concept of an adult dependant is flawed. In 90% of cases this involves women being financially dependent on men, which exacerbates gender inequality. Ireland has obligations to treat men and women equally under the 1979 EU directive on equal treatment in social security. Despite this obligation, the IQA treats many women as second-class citizens. The IQA rules often penalise women, sometimes leaving them with no income at all, such as in the case of one man I spoke to. He was 79 and worried about his health. He converted his savings account into a joint account with his wife in order that she would have ready access to money should something happen. As a result of this prudent and largely technical change, his wife lost her weekly IQA income. In another case, a man who was turning 80 was upset because he will get an extra €10 per week once he is over 80 but this is denied to his wife, who is on the IQA. We made seven recommendations to the committee on the means test for the IQA payment, including abolishing IQA and giving all current recipients a State pension in their own name and indexing the means test with inflation.

Means-testing causes stress and worry for older persons. Every year, people who are worried they will lose their medical card or some other support phone Age Action because the pension rate might go up by a few euro. For example a man in his 80s lost his medical card after his social protection payments increased by €10 per week. He now pays €80 per month more in medical costs and he had to pay €1,000 to replace a hearing aid that would have been free of charge on the medical card. This happens because income thresholds and eligibility criteria for means tests are not linked to inflation or to welfare rates and it happens all the time. The Department of Social Protection has been carrying out a wider review of means tests. Age Action recently sent a submission to the Department and we have sent a copy of that to the committee as well. We made nine recommendations, including publishing a detailed rationale for Ireland’s high reliance on means-testing, indexing means tests against inflation and average earnings, making changes to increase fairness and to remove poverty traps and improving cross-departmental co-ordination.

The whole concept of means-testing is problematic, however. The wider context for any review of Ireland’s tradition of means-testing is that there are alternative welfare models across Europe, including countries that use means-testing far less often than we do. Major changes are possible for Ireland when viewed from a medium to long-term perspective; not least when considering how other small European open economies provide for high levels of productivity and competitiveness while also providing greater social security, greater gender equality and a greater level of economic equality than is achieved in Ireland. Three alternatives to means testing include universalism, whereby we could simply make more payments and schemes available to everyone and then use general taxation both to fund them and to recoup any excess income that someone might get from a social protection scheme. Indeed the State pensions are taxable. We could use credited social insurance whereby we could expand the giving of PRSI credits for caring, parenting and other unpaid work in order that more people can access full welfare payments. Finally, we could target payments based on other eligibility criteria, not just income or savings, such as, for example, once again giving a medical card to everyone aged 70 and older based on age and not on income.

To conclude, I would like to read one older woman’s words, which captures what many people are feeling about our system of means tests, to members. She said, “It’s that meanness isn't it, about the little allowance that is making life slightly easier for you but at the slightest thing, they feel they can just take it away from you again.”

An Cathaoirleach

I thank Dr. O'Connor and I now invite Ms Kavanagh to make her opening statement.

Ms Niamh Kavanagh

I am the development officer for the Irish Senior Citizens Parliament. I will be joined shortly by our CEO, Pat Mellon, who is attending the joint committee meeting next door. The Irish Senior Citizens Parliament, ISCP, offers a strong, unified voice representing the needs and rights of older people at local, national and European levels. We seek to enable and encourage older people to self-advocate and to build capacity and confidence to speak for themselves on all issues. Our vision is an Ireland where older people are valued as equal citizens, can enjoy the full protection of their human rights and are full and active participants in society. We welcome and thank the Oireachtas committee for the opportunity to engage with it and to outline our views on the impact of means-testing on the State pension and other social welfare schemes.

We believe in using the lived experience and knowledge of our members to inform our discussions. We met a cohort of our member base to listen to their views on this key issue and the following content is the result of this discussion. The ISCP has the issue of equality and rights for older people at the core of its work. We work to ensure the implementation of policy commitments pertinent to aging and older people. A fundamental element of this relates to ensuring our members and older people generally have security of income in their older years, thus ensuring a quality of life and equality of opportunity. The purpose of a social protection system is to act as a safety net for those in need of income support to reduce the risk of poverty and social exclusion. Central to this system for older people is the pension. State pensions are a significant financial resource for older people in Ireland, constituting approximately two thirds of total income for those aged 65 and above. Pensions are the largest outlay of the social protection system, accounting for almost 40% of total social welfare expenditure in 2019. Compared with EU-27 member states and OECD countries, Ireland still spends less money on pensions, which is a function of Ireland’s demographic structure, and relies more heavily on means-tested social assistance rather than social insurance. However, retirement from employment continues to correlate with a decrease in income, resulting in dependence on the State pension for many individuals within Irish society. The growth in wage incomes has outpaced that of State pensions, thereby exacerbating the disparity between the incomes of retirees and employed individuals.

The commitment to link the State pension to 34% of the average wage has not been realised, thereby adding further insecurity to pension provision and the gap between rich and poor. This is further exacerbated by people’s ability to afford a second tier of pension. The Irish economy is influenced by policies that tend to favour those who are already doing well. For example, as Social Justice Ireland has reported, things like pension tax breaks mainly benefit the top 20% of earners. Because of all the tax changes and welfare programmes in budget 2024, the difference between rich and poor people will reduce by €10 per week. Overall the rich-poor gap will be €960 per week in 2024. This decrease is mostly because of the temporary measures to help with living costs in budget 2024. It is worth mentioning that the emergency energy crisis measures from 2022 to 2024 also helped to reduce this gap in 2022 for the first time in ten budgets. Unfortunately, as those much-needed temporary measures are not scheduled to be repeated, the gap is expected to widen again. Age Action's 2023 report, Spotlight on Income in Older Age: The State of Ageing in Ireland 2023, found that poverty, deprivation and income inadequacy are facts of life for many of those who are reliant on the State pension, which is the “second lowest level of income replacement in the EU”.

Our members echoed this fully as part of our preparation for this meeting. One said:

I am afraid to heat the house everyday as my oil might run out, I keep it for when I babysit my grandkids (3 days a week).

Another said:

I shop by the offers on 'sell by’ dates; if it is out of date today then it is cheaper.

The current system is not structured to encourage people to access all to which they might be entitled. The anomalies within the system discourage engagement with it. We have found that many people are fearful of losing income if they apply for supports like fuel allowance or living alone allowance, as mentioned. One person said:

I had heard stories of people losing income because they were means tested, there were so many rules for different supports & no one central department to ask for information. I just gave up. If I apply for one thing, I might lose the other. It is better off to keep quiet.

The fact that non-contributory pensions are already means-tested leaves us fearful that discussions like these may mean that thought is been given to means-testing contributory pensions. What we do not need is more ways of taxing our retirees; rather, we need a system that recognises the needs of those who have reached retirement and need to feel safe, comfortable and valued. Rather than means testing the basic needs of those who have given more than their fair share, a closer look at the pension contributions tax breaks, which very high earners can avail of, may well be a more constructive and equal approach.

There is need for an overhaul of the system to allow for a more effective support to ensure older people and those on other State transfers would have a better standard of living. The ISCP supports a review based on Social Justice Ireland’s call for a universal pension, which would solve many of the problems inherent in the system as it would provide a guaranteed income during old age for all older residents on an individual basis, without regard to anomalies in their social insurance history. It would also provide a secure and certain framework around which individuals can plan for their retirement and, over time, it would distribute income, creating a more egalitarian society.

We believe very strongly in the rights of older people to continue to contribute to society in all areas, including after their working lives. In the last few years, we have worked with many retired workers and staff associations with similar experiences and concerns relating directly to their income. There is a very real concern for their ability to afford to engage in society. One member who was brave enough to be named, Breda, said:

I gave up my outings with my retirement group as I could not afford to go. I also stopped my art class as the cost of the contribution to the hall rental was more than I could afford.

The ISCP believes strongly in the right of older people to be full participants in society. We believe this topic needs further debate and discussion and a more nuanced approach than the current system offers. We thank members for their time and look forward to discussing this further.

An Cathaoirleach

I thank Ms Kavanagh very much. I will now open it up to members. Deputy Ó Cathasaigh, the Leas-Chathaoirleach, was first to indicate.

Deputy Marc Ó Cathasaigh

I thank the witnesses very much for their presentations this morning. They have been very helpful.

We heard earlier, and this is something we all know, that the social protection system is Ireland is ad hoc. There have been loads of bolt-ons as it has developed. It is broadly changing from one type of social protection system to another. I am not sure that is necessarily being driven by some sort of an ideological top-down approach. It is difficult to identify across the political system in Ireland whether there is any real coherent vision for what we would like our social protection system to look like in ten, 15 or 20 years from now, which is an issue. Because we have had all these various bolt-ons to solve a particular problem or fill a hole, however, we have a very fragmented system, particularly when it comes to means-testing. I very much take on board the point made by Mr. O'Connor that above one fifth of the payments made by social protection are means-tested in Ireland, which is very much an outlier. Only Denmark has more and they have a very different system.

It is often the role of a TD to act as a customer relationship management, CRM, system. The meat and drink of our constituency clinics are actually people who come in because they do not know what they are entitled to. Very often, we are trying to link people who come into our constituency offices to something to which they are entitled. I do not know if that is necessarily the most common issue, but it is certainly what most constituency clinics and offices do. However, the onus should be on the State rather than on the elected representatives to reach citizens and explain to them exactly what it is they are entitled to. The witnesses made the point very strongly that we need to stop moving the goalposts quite so much that people might be entitled to something this week and not be entitled next week. If we are making broad scale changes to our rates of social protection, we need the different parts to speak to one another, not only because we need to avoid cliff edges but to make sure we are not pushing people off the cliff as well, which is something that very often happens. The message coming across very strongly is that we need to do something about the consolidation of means-testing so that it is happening in one place and the different parts of the apparatus are speaking to one another.

The committee has been strong in calling for benchmarking. The witnesses made reference to the roadmap of social inclusion and commitments therein. The idea is that it should be something people are hanging on the budget on a yearly basis to plan out their fixed income against the background of inflation whereas it is, unfortunately, very clear to people that they should wait around on budget day to find out whether they have €5, €10 or €12 extra in the week to try to help them get across the line.

The complexity leads to a level of stigmatisation. If somebody comes into my office and I tell them I think they could be eligible for something and we should have a look at it, it almost feels like we are trying to pull a fast one on the system whereas we are not at all. This is an entitlement somebody has. The stigmatisation should not, therefore, be there.

I am not sure anything I have said yet amounts to a question. I do have a couple of questions, however. I want the witnesses to comment on the taxation of universal benefits a little more. There is merit in it and it has to be examined. I also would not make any bones about it being controversial, however. If we talk about a taxation on child benefit, for example, which is the best known universal payment, that will not be without pushback. We would have to consider very carefully what the cost-benefit analysis on that would be because it is one of the very few universal payments we have about which people do not feel in any way stigmatised. They actually feel that is something the State provides by way of thanks as part of the social contract.

I also want the witnesses to take the opportunity to explore this idea of credited social insurance and investigate it in light of issues such as participation income, which we hear about a lot, and how they might see that working in practice.

An Cathaoirleach

I thank the Deputy. We will go to each of the groups. I ask witnesses to try to keep their responses tight because we have three groups and there are a number of questions members wish to raise. I will take Mr. Moynihan first.

Mr. Seán Moynihan

I appreciate the comments. What the Deputy said is really interesting. TDs are really aware of what we experience on the ground whereby people do not know what they are entitled to. As Mr. O'Connor listed, approximately eight payments are means-tested and, therefore, people have to go through eight different systems with all the different criteria.

The other issue is that some of these things happen by accident. Nobody set out to design the system. We welcome the fact that a deep dive is being done on this. We need to create a vision of what we actually want from this and then unify a situation on that.

The way the system seems to look at things is a bit like any grant whereby we are always worried about the 3% of people who might try to get something they are not entitled to rather than getting people what they are actually entitled to in the simplest, most cost-effective way. For us, 50% of the people we work with are over 75 years of age, roughly around 50% live on their own and the majority are only on the State pension. The reality is that because of that age, we have an awful lot of people who are trying to deal with these complex systems, possibly where they also have frailty and health issues or where they are on their own and do not necessarily have the supports to do that. It is about having an overhaul where we unify how to do that to reduce the volume of means-testing and ultimately go for that.

On the taxation of universal benefit, obviously, if certain people are over a certain threshold of income, then it falls into that.

That is a complex question as well, but the main focus here is to unify and simplify how and why we do the means test and what we are trying to achieve.

Dr. Nat O'Connor

In relation to the application process, it should be possible for the Department of Social Protection to have a single form whereby people can fill out their details and be told what payments exist. Unfortunately, though, many people have the experience that unless they tell the officer sitting across the desk that they are applying for certain payments, they will not be informed if such a payment exists. That is a concern. When the Department does engage in advertising, as it has done recently with the additional needs payment and the fuel allowance payment for people aged over 70, it has seen an uptake. This shows that people are unaware of entitlements and that such advertisements can work.

On the consolidation of means testing, which the Deputy raised, that was a proposal by the Troika, comprising the International Monetary Fund, the European Central Bank and the European Commission. There is a danger here that there could be a consolidation downwards to minimise the welfare system to a real minimum. At the same time, while it makes sense to consolidate the means tests into a coherent system, it should not be a levelling down but a levelling up, and it should make sure that these anomalies that we currently have do not occur.

On the issue of taxation of universal benefits, we tax the contributory State pension and we also tax the non-contributory State pension, which is means tested because people can earn a certain amount of money, €200 per week in fact, alongside that. That figure has not changed with inflation either and, therefore, the amount of money a person can earn has gone down. While it is not strictly a means test, it is an example of how one of the eligibility rules has been diminished by inflation because that, too, has not kept up as these things have changed.

On the final point, which was about participation income, our welfare system is based on an anti-poverty approach. It provides a minimum or basic income to keep people out of poverty. It is not like the income replacement systems that are common across north-west Europe. From that point of view, people should be entitled to an income based on their basic human rights and their need to achieve a minimum essential standard of living. There should not be a participation eligibility element to that; it is simply a basic requirement. If we had more earnings-related top-ups, we could perhaps talk about participation income, rather than this happening for the basic welfare payments.

Ms Niamh Kavanagh

We agree with what Dr. O'Connor and Mr. Moynihan have said. A consolidation of the means-testing system is definitely needed. It would give people more access to information and simplify the application, placing it within the remit of one Department as opposed to several Departments. In terms of crediting social insurance, as Dr. O'Connor said, pensions are taxed, so why can other social welfare payments not be taxed slightly as well?

Mr. Pat Mellon

The Deputy is correct that the universal scheme is a great idea. He is also right about the issue of taxation. A problem occurs when one looks at taxation just for universal schemes. We must look at the taxation of benefits that are given to private pensions, whereby people who are on huge salaries can avail of tax breaks. It is a loss to the Exchequer at that stage and that could be more equalised. If we gave everybody a universal pension and forgot about the private pensions, there would be a saving on that. We cannot have it on both sides.

Deputy Donnchadh Ó Laoghaire

I thank the witnesses. This is a very interesting topic. The Parliamentary Budget Office made a presentation this morning. I do not have many questions because I am at the stage of absorbing information. This is a vast area. During our meeting this morning, I made the point that there is both politics and policy in this. We are trying to design a policy that is the most effective, while trying to ensure the social welfare system has the broad consent and acceptance of the population. A broad mass of people should feel some sense of ownership of the system and it should not be at risk.

Many very good points have been made, including the three alternatives to means testing, which Age Action Ireland has put forward, namely, universalism, credited social insurance and targeting payments. I will make an abstract point. If we are to have a properly progressive taxation system, why should we not have payments that are universal? If people are making an extra contribution in their taxation, everyone should be able to benefit from it on a universal basis. The problem is the opportunity cost of cost of doing so; if we decided to do it, there might be other things we might not be in a position to do.

My next question is for Age Action Ireland. I am trying to imagine what representatives from the Department of Social Protection might say if they were sitting here. We in this committee probably need to take a step back from the system as it currently is. As Deputy Ó Cathasaigh said, while the system works very well in many ways, it is a bit like Johnny Cash’s car, where one piece at a time is being bolted on bit by bit. We need to step back and look at the system in a more global way. To slightly contradict what I have just said, if representatives from the Department of Social Protection were to respond as regards the increased qualified payment, I imagine they would say that while people are entitled to make a claim, most people in these circumstances are not entitled to a contributory pension. They probably would not be on the increase for a qualified adult, IQA, otherwise but they are entitled to claim a non-contributory pension in their own right. Of course, that would be subject to the means test and would likely be a relatively small amount.

I suppose the question I am asking does not relate to what Age Action Ireland is proposing. The Department of Social Protection would say that people can make a choice between the IQA and their own payment and that they are entitled to seek their own payment if they so wish. Some people might prefer the choice of the IQA. I am not sure if I have come across examples like that. Usually, when this is the case, it may be because of the ease associated with accepting that payment. There is definitely an issue there. Let us call a spade a spade; we are primarily talking about women who spent ten or 15 years at most in the workforce before raising children and never returned to the workforce because of the way the labour market and society were at the time. There is definitely an issue there. How would Age Action Ireland respond if representatives from the Department of Social Protection were here and were to say there are choices to be made and that people may make that choice if they want? Other than that, I do not have many questions. Accessibility is a significant issue on which the witnesses may wish to comment. The issue is not just with the online issues and the way forms are presented. The centralisation of social welfare staff has been regrettable for a whole category of vulnerable social protection claimants. I live in a city. In my constituency, Intreo offices are not as accessible as they were but they are usually one trip on the bus away from most people. However, in parts of rural Ireland that is not the case and it is much more difficult to access the Intreo office. There is always the telephone, but when a complex issue arises people like to be able to see the person before them and discuss it with them. I ask for comments on that.

I also have an observation regarding means testing. The committee's remit is the area of social protection. Means testing is an issue across the board. The point about medical cards was very well made. I am of the view that we need to move rapidly towards a universal healthcare system. That is the direction in which we need to move and the expansion of medical cards is a step in that direction. On the means-testing regime in housing, while I accept that there has been a welcome increase in the income threshold, the method is frustrating. Someone on the housing list for eight years who exceeds the income threshold in one year before falling back under it will have to go back to the start of the process. That issue is not within the committee's remit but it is one that always frustrates me. It applies to all ages and the application cannot even be put on ice. That people have to start again at the bottom is absolutely crazy.

I do not have many questions. We are probably all absorbing what is going on because we are forever wary of unintended consequences. There is an opportunity here for us to take a step back and look at the system as a whole and how it operates. There has been an increase in the number of older people in poverty and at risk of poverty over the last two or three years.

The Vincentian Partnership for Social Justice flagged that. Things could be done to deal with that. The living alone allowance is very important. I am looking for a little feedback. I am finished. I did not ask many questions but those are some initial thoughts.

Ms Niamh Kavanagh

I will comment on a few things the Deputy said. On older people being most at risk of poverty, the survey on income and living conditions from last year said the cost-of-living measures had a very positive impact on reducing that risk. It reduced it from 16.9% to 8.3%; it halved. If we take those measures away, by next year the risk of poverty will double once again. As was said, this is the highest age group experiencing enforced deprivation as well. People who live alone and in rural areas are impacted the most, especially with regard to means testing and if they are living with an independent adult, which is common nowadays because of the housing crisis. Many people my age especially are moving home with their parents and do not contribute to rent or fuel, yet the pensioner is being means-tested and refused those allowances based on that.

Dr. Nat O'Connor

Stepping backwards and looking at the welfare system as a whole, the key word is “benchmark”. What are we benchmarking our welfare rates against? There are a couple of contenders. There is the MESL, which is published by the Vincentian research group under the SVP. We currently look at it but we have a situation where somebody can be below that minimum threshold of being able to afford the basics of life – it is all itemised item by item by the Vincentians – yet their welfare is cut off before they even reach that threshold. That is an example of one benchmark we could integrate more into the welfare system to make sure that nobody below that threshold is denied assistance. The other way of benchmarking is against total average earnings. There is a pledge that the contributory State pension would be 34% of total earnings. The poverty line is 60% of median earnings, so it is not quite the same. These are key benchmarks. We can use them as an holistic framework where people are being given supplements to get them up to that level rather than being denied the extra supplement because they do not pass this or that means test and they keep falling below that threshold. There is some key logic is focusing on those benchmarks.

Regarding choices, people might have to choose between the increase for qualified adult to their partner’s – usually their husband’s – State pension or the non-contributory pension. As we set out in our submission, the means tests and other eligibility criteria for those two payments are very different. In one circumstance, a person might be better off on one of them and, in another circumstance, better off on another. It is a difficult decision. If I had to make a medical decision, my GP will give me advice so that I can make an informed choice, yet people are coming to the social welfare system and not being given that level of information so that they can make an equivalent informed choice. They are being asked to simply choose a form or choose what they are applying for. There is a lack of helping people. As others said, it is a complex system.

It is worth noting a couple of reference points. Regarding the holistic view, we recently had the Commission on Taxation and Welfare. It was welcome that this is the first time we had such a commission that focused on welfare as well as taxation and talked about the integration of those two systems, which are not fully integrated. In many other countries, they are integrated and that is another overview. It might also be worth looking at the work of Eurofound, the European agency that looks at work and living conditions, which is based in Loughlinstown even though it serves the entire EU. There is a body of expertise there that could be brought to the committee if members so wished.

Another issue to bear in mind in all of this is that the Department of Social Protection, like every other Department, is limited by what the Department of public expenditure will allow. It seems increasingly obvious that the Department of Social Protection is bringing forward what it would like to achieve, such as Government commitment to 34% of average earnings - input was made to Government in the latest budget on that - but the Department for public expenditure is saying, “No.” Because the Department of Social Protection is uniquely about cash payments, the relationship with the Department of public expenditure needs scrutiny. The decision-making criteria for one Department is very different from another. With regard to designing a social welfare system, the Department of Social Protection might well design or present a more robust welfare system but unless the Department of public expenditure is part of that conversation, it is likely to be looking at it from a very different perspective, and that needs to be addressed as well.

Ms Mary Murphy

I wish to come through on the point about the accessibility of services and the ability for people to sit down in front of somebody based in the community to talk about the options available to them. The loss of that is felt very strongly by older persons and there is a strong sense that has been on the decline since Covid. Things were shut down and were never opened up again. They do not know who to go to or who can help them. I appreciate the Deputy’s point that the complexity of these systems leads to them being more stigmatising and this is another example. People do not know where to go, what is available to them or what they are entitled to and it leads to a situation where they are not getting the full supports they are entitled to. There is not a sense of entitlement and that getting these payments and supports is a normal part of being a member of society. For older persons who have been working for most of their adult lives and have not been in contact with the welfare system before who are now being told they can go for the additional needs payment, there can be a real sense of that being a threat to their identity or sense of self. They do not want to be the kind of person who accesses payments like that. That will continue if we do not simplify the system and if we do not make the system more visible and accessible. The means-testing will certainly play a part in that. What people are entitled to, what the State is willing to give them and what the State feels they have a right to needs to be made more well understood.

Mr. Seán Moynihan

Housing was mentioned. The whole social protection system is built on people owning housing. We all know since the most recent census there has been an 86% increase in the number of over-65s renting. The rate keeps going up in people in their early-60s and 50s also. The reality of social protection is how people will pay their rent in their old age and remain in their own homes. If they lose a spouse or partner, will they lose their home? How will we all cope with that? House ownership really comes into this because the system is built on it. They can live on a very low income as long as there are not housing costs. It is very interesting and it needs to be looked at as part of this.

Technology was mentioned. Where technology has to a role to play and where people want to be guided through multiple systems is the back office. Across Departments, systems behind the scenes can be simplified while still keeping a human face or easily accessible forms.

Some members spoke about universal payments and so on and where people go over income thresholds. Looking at people living on their own, 19.2% in 2022 were at risk of poverty. In 2023, that was 15.4%. We had the one-off cost-of-living measures in 2023 and if we did not, it would have been 36% of people living alone and on State pension at risk of poverty and we would be having a very different conversation here. There is a role to change the system in such a way so we put a floor under people for when these inflation and different economic spikes hit.

An Cathaoirleach

I remind witnesses that we have five other members who wish to contribute and we have a time limit on this. I ask the witnesses to try to keep their responses tight if they can.

Senator Mark Wall

I thank the witnesses for their advocacy and help for older people. It is much appreciated. I have worked with many of those in the room.

I wish to raise a couple issues. Cliff edges were mentioned a number of times in our earlier discussion as well as this one, and I come across it daily. People coming into the constituency office was mentioned and it is the same in my office. One of the issues that has come up that I wish to get a comment on is gross income versus net income. I gave the example to the Department officials when they were last in of a lady who unfortunately is disqualified from fuel allowance because of her gross versus net income. Not only is she losing out on fuel allowance but she is also losing out on secondary benefits such as the warmer homes scheme, which she does not qualify for as well.

It is wrong, and I am sure that our guests have come across that in their work over time.

On the IQA, I have had both sides of the argument in the last week, would you believe. I have had one where there was a joint account and it disqualified a person and then another one where the person did not want to go ahead with it until I explained that they would qualify because they did not have an account in their own name. The accounts were in their partner's name and they would actually qualify. I met them yesterday and they got that payment. That is the difference and I suppose there is an argument there for both ways.

One big issue I have come across, which has been mentioned by ALONE recently, is the whole back office area. Unfortunately, I have been dealing with a number of people who have had bereavements in the last couple of weeks and in one recent engagement, I had to deal with up to six different Departments for that person, be it for pensions or other Departments that their spouse was involved with. That is very hard to do during that particular time. Also, the issue with regard to means is that the supplementary welfare is €5,000 and the funeral expense grant is done at the moment through the community welfare officer, so it is only €5,000 versus €20,000 in most other welfare payments. That is a problem for people as well. Back office and consolidation need to be looked at, in my opinion. If we were not available or the organisations here were not available, that person would be making six phone calls or emails if they were able to do that.

It has been said by others that this is a listening exercise. That is very much what we are doing today. However, on a day-to-day basis, we come across older people who for technology reasons - which has also been mentioned this morning - have to go to their local TDs, Senators or public representatives to get assistance. Consolidation, for me, is key to providing everybody with what they are entitled to, and I think that has been mentioned a couple of times today. It is startling to hear that when the Government runs advertisements, payments go up because people get to know what they are entitled to. That is something that needs to be worked on. I would like to get a comment on how we can improve that further or whether we need the Government to consolidate.

Again, I thank our contributors today for all the work they have done and I seek a comment on those means test limits, particularly on supplementary welfare, which is €5,000. When I get people sitting in front of me, it is the savings they have for that rainy day and unfortunately, some of them are experiencing that rainy day. It is a very low amount of money. The additional needs payments have been mentioned. I am blue in the face talking about the amount of forms that have to be filled in and the amount of requirements for additional needs payments. Even after the advertisement by the Government and the Minister when she was in with us previously, it is very hard for older people to come around and get together all the documents that are needed for that. Again, I thank the witnesses and the Chair for his time.

An Cathaoirleach

I thank Senator Wall. We might ask Age Action Ireland to come in first.

Dr. Nat O'Connor

With regard to the cliff edges, the obvious thing to do here is to bring in some part-payment or a tapering of welfare payments. In the past, it was said that we have to keep the welfare system simple because it was initially paper-based but now we have the IT systems that allow a good deal of individualisation of people's welfare payments. We are going to see that in the deferred pension, and in the future with earnings-related top-ups, perhaps to jobseekers or on the pension. It should be possible to simply work out mathematically the extent to which someone if worse off because they are or €1 or €2 over the income threshold, and make a partial payment to them that makes sure they are never worse off by missing that threshold. Cliff edges could be smoothed out, and I understand that we have the IT systems, or we are developing them, to make that possible.

On bereavements, the Department of Social Protection is simplifying this by making an online system where you can register a death and it will indicate to all Departments. Our concern with that is that many older people are not using the Internet and so they are further at a disadvantage because they simply are not able to do that. It means that the paper-based system also needs to be simplified to make sure that process improves.

On the growth versus net income, there are a lot of different rules and eligibilities regarding what type of income is included or not included in different welfare payments. That is something that is often not looked at - that certain types of income can be exempt, or certain types of savings can be exempt, such as when you sell your family home to downsize, and the extra savings you might have are exempt in some means tests but not in others. When it is not exempt, people can find that quite punitive. There are always exceptions. I have one example of a woman who put money aside because her adult son has a disability and she wanted to have money aside to provide for his care later in life. There is no exemption for that in the means test, so it is counted as if she could liquidate that money and have it as an income. There are a lot of examples of that, where people want to save for their own expenses. They are afraid of future medical expenses and they might need to do all sorts of things to their homes for adaptability. Yet, the realistic range of costs they might face, in terms of capital costs, is not really reflected in the means test threshold and allowances.

Ms Gráinne Loughran

I thank the Senator for the questions. First, with regard to the additional means payments and supplementary welfare and means and savings, a significant proportion of older people we work with have some savings set aside for their funeral costs. Often, on the basis of those savings, their applications for additional welfare payments are rejected. That is something we have come across time and time again, despite the fact that in many cases these savings are relatively small. About half of older people living alone have savings of less than €8,100. It really is just that payment set aside for funeral costs, etc. That is something that we would really like to see change.

Access to community welfare officers was mentioned as well. We have seen over the last number of years that it is getting more difficult to access community welfare officers, to get appointments, to get in contact, and then to hear back eventually as well. Additional welfare payments are not means-tested as such but they do take into account your means and all the various income you have. It is a very sliding scale. In some areas we work very closely with community welfare officers but elsewhere it is not the case. It really depends on the area.

Second, on the fuel allowance and SEAI grants, we have previously raised them with the Department of the environment because while the fuel allowance is a qualifying payment, the pension is not, and the living alone allowance is not. This is despite the fact that older people live in the oldest and coldest homes and are really most in need of those fully-funded grants. We work with many people who are not eligible for the fuel allowance or who are just over that threshold and who then cannot access a grant for love nor money. We have recommended that the fully-funded upgrades are made to everyone in receipt of a State pension but qualifying for the fuel allowance is really important in that. As we stated, as lots of people were not aware of the threshold change in recent years, they have not applied for the fuel allowance, which then has knock-on effects.

On the increase for a qualified adult and the non-contributory pension, we raised Vera's story in our opening statement. In Vera's case, more than 60% of her husband's pension is being spent on his and her nursing home fees, which leaves her with very limited means for survival. She does not have access now to a non-contributory pension or the carer's pension, despite spending more than 20 years looking after her husband at home and receiving carer's benefits for the same. She raised a family of seven children but she is an anomaly in the system. She does not have access to the non-contributory pension, the living alone allowance or others. In addition to the difficulty when it is whether to choose the increase for a qualified adult or the non-contributory pension, some people do not have that choice because they are that anomaly in the system. I wanted to raise that issue as well.

Finally, on that centralisation of social welfare payments, the digital divide has been raised quite significantly already, and the ability to access. People are generally sent to mywelfare.ie now for any information about payments. We see ourselves that there are so many intermediary organisations, whether it is ourselves here today, the Deputies and Senators here providing information, Citizens Information, or any of those other organisations that provide information on the entitlements that people should be able to access. There is an awful lot of manpower going into this, yet somehow we have not yet consolidated or streamlined those means tests and we are delighted to see that there will be some look at so doing.

How much money and time could be saved and spent on all our jobs and the work all the organisations have to do if it was easier to access the payments to begin with?

Ms Niamh Kavanagh

I could not have put it better myself. To add to that, Citizens Information put in a submission last year referencing the fact that the pension system is so complex that even it struggles to figure out the needs and entitlements of a given pensioner. On means testing limits, supplementary welfare and being means-tested on savings, many people were disqualified because the threshold did not go up in line with inflation and the small pension increase of €12 per week. They found that fuel allowance and other welfare payments were taken from them because of that.

Mr. Pat Mellon

I was at a meeting of another committee this morning. One of the issues that came up there was that of the male member of a couple who at 66 years of age had serious health issues and could not work. The only pension he could access was non-contributory, but because of his spouse's employment and income, he could not get anything. The suggestion was that if his spouse gave up work, he would be entitled to a non-contributory pension. It is discrimination in its simplest form. We want equality and all that and one of the issues is that means testing includes the income of a spouse, partner or cohabitant. That has to be looked at.

Deputy Paul Donnelly

I have a few observations. A matter alluded to by several people is that it is becoming increasingly difficult and people are coming to us in absolute frustration because they cannot get an answer from the Department and they cannot get a person to speak to. They are using our offices to try to get an answer after they have submitted documents. It has got worse, especially since the Covid-19 pandemic, for people trying to contact the Department.

Another matter that was alluded to is older people renting accommodation. There is an issue in respect of the housing assistance payment, HAP, and people using whatever limited funding they have to try to bridge the gap between HAP and the rent being charged, especially if they are in accommodation for two, three or four years, where the rent has increased by 4% but the HAP has not increased. People are supplementing the rent with their income, which is pushing them further into the poverty trap. The problem is that everyone knows this. Anyone who is involved with working with people on HAP knows that if the Department that processes the HAP had knowledge that people's income is at a certain level with respect to the rent, the HAP would be cut off. That means people would be pushed into homelessness, so people are paying the rent. There are adult children who are paying rent, supplementing the rent with their income. That needs to be looked at. We are seeing that the HAP is not keeping up with rents. It is not sufficient to pay the rent and people are supplementing it because the only alternative is for them to go onto the streets.

Mr. Seán Moynihan

I think the point about housing was well made. At the end of the day, approximately 30% of people who are renting are getting a HAP. If we do not make a change and that continues into retirement, the pension is around €1,600 per month, but the cost of supplementing people's rent will be much higher. The reality is that people will not be able to afford the rents where they were living, where they raised their kids or in their communities. There is a limited geographical area and limited availability where people will take a HAP. That really underlines that the social protection system needs to be addressed.

The other point the Deputy made is that people are using the offices of public representatives, Alone and everyone else to get access to the system now, which has regressed since the Covid-19 pandemic. We are all seeing on the ground how hard it is to get in touch with community welfare officers and others and the longer decision times. Ultimately, that needs to change.

A slight change of philosophy is needed. Years ago, people used to fill out a form and the Department of taxation checked every form that came in. The Department had all these people and bureaucracy checking every form, for anyone who is old enough to remember that. It was switched around, the Department trusted everyone and now it carries out audits. It is considered the most efficient Department in the State. With such a change of philosophy, the Department of Social Protection could be an outlier and other Departments could follow.

Mr. Pat Mellon

We have 50,000 direct members and up to 200,000 or 300,000 overall and we are getting calls to the office from people who are stressed and asking for help to access X or Y and what their rights are. If we look into it, we find ourselves snowed under. It seems to be totally illogical with GovID cards and everything else and Revenue. These things should be simplified. PPS numbers should show what people are entitled to. Mr. Moynihan mentioned housing, which will become an increasingly difficult thing. We had a crash, a period when people were locked out of the market and not able to buy. Now people who are 35 to 40 are getting mortgages that are 35 to 40 years long. They will be paying mortgages into their late 70s. That is a huge issue that will happen and the means test is coming on top of it. There does not seem to be any certainty about people's future.

Dr. Nat O'Connor

On the specific point of the older people in their 60s who are renting in the private rented sector, at the moment the situation - again it relates to means tests - is that people may not be eligible to go on the housing waiting list for the local authority because their income is above the threshold, but once they stop working, they will not be able to afford market rents. We have talked to a number of people in their late 60s who are still working to pay the rent and do not know what they will do. In effect what will happen is that as soon as they move to a pension income they will become eligible for the first time for social housing as their income will be low enough, but they will go on the waiting list and the average waiting time for an older person is four or five years. The State will be on the hook for four or five years of the HAP or other rental payment supplements in an increasing number of cases of older people transitioning out of rented accommodation. People may be forced to move and lose their connection to the area where they have built their lives. The issue of top-ups is a problem. People could be on a low pension income and getting some help from the State to pay their rent but also, as the Deputy said, topping it up, which leaves them in effective poverty and deprivation that might not be perceived in the statistics.

Senator Eugene Murphy

I missed some of the presentations. If I ask a question that has already been answered, a brief answer will suffice.

The Chair will agree that means-testing frightens a lot of people. That is what I find from clinics. Ms Loughran mentioned that people have put money away for funerals and such. That issue comes up regularly. I will put a few questions to Mr. Moynihan about Alone's perspective and if there is time, I do not mind if others come in.

We have commitments from the Government on benchmarking of the State pensions. Where are we with those commitments? Has Alone been given that information?

With respect to the work Alone does, does the complexity of means-testing have a bigger impact on older people, in its experience? Mr. Moynihan will know where I am coming from with that question. The whole process has probably been discussed already. How can we make it more straightforward for people? How can we remove this element of fear and worry that comes into people's lives when they are told they will be means-tested? They get quite upset about it.

Mr. Seán Moynihan

People mentioned benchmarking of the pension.

It is in the programme for Government and we would like it executed. We struggle to know how the State is going to plan. If the pension is benchmarked at 35%, you can then plan for the future. We think, and it has been proven by other think-tanks, that the State ultimately can afford a pension. At the moment, the pension comes out of daily expenditure so it is not even ring-fenced within the budget. Every year or every couple of years, especially after going through inflation, we have a whole bun fight of what the State pension should go up by and around fivers and all these types of things. There is no certainty for older people and the worry that it brings. There is also no certainty for the State in planning for what it needs to do as we get an ageing demographic. From our point of view, that is the type of planning that needs to go in.

The reality is that 34% of the average industrial wage puts a floor under people. It is not excessively generous. If people have crises, housing issues or anything else, at least it is a start on that.

On the complexity of the system that the Senator mentioned, it has been outlined by a lot of colleagues how that needs to be streamlined and how we need to do the payments on it. At the end of the day, we have to realise the number of people who live on their own; approximately 33% of older people live on their own and that is ever increasing. We need to make a provision for that because whether it is health and welfare, falls, costs or risks of poverty in question, all those risks increase when you live on your own. Ultimately, we need elements in the system to respond to that.

Ms Gráinne Loughran

I will come in briefly on where we are at on benchmarking. The roadmap for social inclusion committed to the introduction of a system of benchmarking rates of pension to wages and inflation. The commitment was downgraded. The mid-term review of the roadmap revised the statement to use the smoothed earnings approach to benchmarking and indexation as an input in the annual budget process. There was never any public explanation as to why the commitment was revised. We ascertained via parliamentary questions that the input was developed. ALONE requested the budgetary input regarding benchmarking from the Department of Social Protection via a freedom of information, FOI, request. The request was denied. The schedule of records that we received showed that the technical paper developed was five pages in length. The truth is that we are not entirely sure where the original commitment has gone. We believe it has been downgraded and it is to stay that way. We asked if that was the case, it be explained publicly. We have not received a response to that.

Deputy Joan Collins

I thank the witnesses for their presentations. I really appreciate them and they have highlighted some aspects I was not aware of. They also made clear some issues I was aware of, particularly relating to the average earnings and the input to the budget. We still have not got an explanation, as Ms Loughran said.

I will dovetail a bit to the PBO report we discussed earlier on universal payments and linking them with taxation. Mr. Moynihan mentioned auditing and how that has streamlined it in taxation. I will certainly be raising some of these issues, and I know other members of the committee will, around how we can deal with the issues of means-testing, universal payments, etc., and how to design a better payroll to make it easier for people to access payments.

Mr. Moynihan talked about energy poverty. We had a good few people, obviously older people, who had energy bills of more than €1,000 that built up during the inflation crisis and so on. They are still trying to deal with them. What link has ALONE had with Departments on retrofitting its complexes? That would be an important aspect of dealing with energy poverty. Do organisations such as ALONE get specific access to monies to retrofit? For example, the building at Willie Bermingham Place, which is in my own area of Dublin South Central, must be there nearly 50 years. I have been down to the complex and it needs serious retrofitting to save energy for those tenants in the building. Can Mr. Moynihan advise if ALONE has direct funding to do retrofitting in its complexes? If not, what can we do to ensure that does happen? That is key to me, for both energy poverty and general climate protection.

Mr. Seán Moynihan

ALONE is an approved housing body as well. On the specific issue of access to that, I do not believe we have access to those grants. In fact, it is a different housing problem. As AHB capital acquisition schemes come out of the scheme from the State, they have actually halved the income. The Department from which we can get unit offs, usually after 20 to 30 years, gives us a higher payment, which gives us the ability, when a scheme is more than 25 years old, to keep renovating. In our case, what we have done with retrofitting is we have actually done a lot of it through philanthropic contributions, that is, through fundraising.

As for energy poverty, over the past two winters we have had to run an energy winter response. We had a national support line seven days a week, 12 hours a day. Through one of the Departments and contacting all the energy companies, we had been able to get access to vouchers and other things. There has been a huge increase in the number of people coming to us looking for that. It was never an intervention that we had to do prior to two years ago. Between last winter and the winter before, we are looking at €300,000 to €400,000 worth of interventions from ALONE, something that we had not previously needed to do. I am sure that, through the Society of St. Vincent de Paul and others, this has been replicated, although we welcome the energy credits that were there.

On retrofitting and energy poverty, we all know that older people generally live in older houses. The statistics show they have the lowest BER ratings. A bit like social protection, accessing grants can be complicated. Sometimes, someone is needed to support an older person to do that. People sometimes give up on the hassle. Therefore, you really need your own means in some ways to access them. We all know what a probate sale of a house looks like but sometimes people look at that as a person's wealth, but it is not. It is not an asset that can be used. People need somewhere to live.

Deputy Joan Collins

For clarity-----

An Cathaoirleach

I ask Deputy Collins to be brief as we have three other members who wish to come in.

Deputy Joan Collins

-----Mr. Moynihan is making it very clear that AHBs have no access specifically to retrofitting grants or anything like that for their complexes or for housing estates.

Mr. Seán Moynihan: I will go away and clarify that. I did not come prepared for that question but I will drop a note to the Deputy on it. My understanding is, from my experience, that we do not, but I better check that as I do not want to give a totally definite answer and be wrong.

An Cathaoirleach

Mr. Moynihan might come back to the committee on it because we are about to produce a report on this. We can incorporate that response into it.

Mr. Seán Moynihan

I will clarify it fully. I just do not want to give a response that turns out to be wrong.

An Cathaoirleach

Does Deputy Collins have any other questions?

Deputy Joan Collins

No.

An Cathaoirleach

Deputy O'Cuív is next. Deputy Ó Laoghaire has a supplementary question as well.

Deputy Éamon Ó Cuív

I welcome the witnesses and thank them for their submissions. Unfortunately, today has been broken up between different committee meetings and different things going on.

First, how often does ALONE come across the problem of a person who may be living in a very poor house, has a very modest income all his or her life and has been squirrelling money away because he or she thinks it is going to pay for the nursing home? That person is on a non-contributory pension and suddenly finds that he or she is means-tested at an absolutely bizarre rate. For example, once people hit over €40,000, they are means-tested at a rate of 20%. They are expected to spend the capital.

Logically, they would be better off spending the capital, but people who have saved all their lives are often very reluctant to spend it. They are afraid. Do the witnesses come across that problem? I come across it all the time. Sometimes there is a dichotomy between the living conditions and the amount of money in the bank.

I was glad to hear the disability allowance issue raised. I have come across this in respect of parents who have died but who were very careful during their lifetimes. If such parents left the proceeds of a house and maybe some savings to, say, three offspring, one disabled since birth and who has never worked, the two without a disability will get money tax-free up to €350,000, whereas the person on the disability allowance will lose all of that allowance. Would the witnesses care to comment further on that? I am referring to a real-life situation I have come across.

The other issue relates to middle-class or working people, or people who have worked all their lives, mainly one-income families. The great anomaly with the increase for the qualified adult is that where a couple have shared all their assets, resources and the money coming into the house, based on a partnership with a division of labour, they are penalised. They would not be penalised if they had kept the resources in their own names.

There is a further anomaly I want to talk about in respect of pensions. I wonder whether the witnesses come across it. I come across it all the time. Maybe this is because I live in an area with many fishers and farmers. It is a mad anomaly. Older people are more likely to be on a non-contributory pension. As time goes on, there will be fewer people on it. If your farm income is less than €5,000, you cannot pay PRSI, meaning you have no way to buy insurance. The anomaly is that if you are a non-contributory pensioner and earn €200 per week or less, you get to keep it all, means-test free. I know of a fisherman who was taken to court over this matter. He earned the amount in question fishing and did not declare the income. It was assessed on the basis that the first €30 was exempt. The rest was not, and the authorities wanted €170 back. Do the witnesses, as members of organisations dealing with elderly people, come across this? I certainly do. I would say the Cathaoirleach and most rural Deputies, including my colleague Senator Eugene Murphy, have come across it. It is very common. What is the witnesses' position on this? Should a simple change be made so the incomes of the self-employed and the employed will be treated the same, with no crazy, irrational, illogical discrepancy between the two?

I would like an answer to those simple questions. We could have a big philosophical debate about it but ultimately people want practical, incremental change. We are not going to change the world in a week; we will change it by getting rid of the worst anomalies in the system.

On housing, I worry about what will occur if a large number of our pensioners wind up in private rental housing. They could have quite good pension arrangements, such as a private pension and a State pension, but if they are in private rental housing without State assistance, they will hit the wall. I agree on that. It raises two issues. Until more recent times, pensioners tended to be in two categories. They were either in social housing, where the rent was relative to their income, or they owned their houses. Very few were in private rental accommodation. We need to think of a totally new approach if people are going to end up in private rental accommodation. The first of two solutions is changing the eligibility criteria for social housing for elderly people in order to widen the scope. For people with very modest incomes in private rented accommodation, the costs are too high. I agree that this is an issue we will have to tackle in the future, either through the housing budgets or the welfare budgets. It becomes unsustainable. For people in social housing, one would hope that the social housing rents will match incomes right across the board, be it in respect of social assistance or pension payments.

Dr. Nat O'Connor

On the non-contributory State pension, the Deputy is quite correct. You can earn up to €200 from employment without its being counted if you are on the non-contributory State pension, but you cannot earn from self-employment. That is an anomaly in the system and a very good example of the issue with the eligibility criteria that sit alongside the means test. It is not just about a means test for €200 but a matter of €200 of a certain form of income rather than other forms. That is definitely a problem in the system.

With regard to the issues of capital and saving for older age, Age Action published a report last year, Spotlight on Income in Older Age. We conducted surveys, interviews and focus groups with older persons to understand their circumstances regarding income and savings. On the issue of squirrelling money away and having money for older age, there is a big element of fear. People do not know how long they are going to live or the expenses they will face. They could incur medical expenses and the boiler could go in the house. They could be in a rural area where they need a second-hand car, and they might need to buy another second-hand car to keep them independent, able to get around and do the basic things they need to do. There is much fear and uncertainty over how much money they will need so they will not become destitute in older age. A great risk with the means testing is that the State will push people to spend their savings but have to step in ten years down the line with grant schemes and additional supports if those people no longer have any savings. That makes no sense at all. We need to change our understanding of how long we are going to live. The good news is that the average life expectancy at the age of 65 is 20 years, but that means that, over the course of those 20 years, you will have to replace the second-hand car and, probably, the boiler. You will certainly have to put insulation into your home if you have not done so already and possibly add more.

There are very knowable capital expenses, which is why Age Action has called for a cost-of-ageing study to be conducted. We recently carried out a cost-of-disability study. We need to look at the evidence concerning the kinds of basic costs – these are not the costs of luxury items – to keep people functioning in older age. A study needs to be carried out by the Department of Social Protection or a State body so we can plan based on that information.

Mr. Pat Mellon

The Deputy mentioned housing. Housing is a big issue and it is now an intergenerational one. There is another trick now in that adult children who want to get on the housing ladder may put pressure on parents with savings, stating that if those parents did not have those savings they would avoid the means test, thereby encouraging a transfer that the parents might not be overly anxious to make. The money gives the parents little security.

We recently encountered a very unfortunate case. A lady contacted us who had spent her entire life looking after a dependent child with special needs. The dependant passed away in adulthood and the lady, who was non-contributory, discovered at 66 that she had no pension. Her husband's pension meant she was not allowed one.

Her comment to me was that she had spent all her life saving money to the State by minding her adult son but that now she was an appendage of her husband. As her final comment, she said that shower up in the Dáil wanted to take her out of the Constitution. What can you say?

Deputy Éamon Ó Cuív

The Government changed that.

An Cathaoirleach

The law has been changed of course in relation to that now.

Deputy Éamon Ó Cuív

Is it long-term care?

Mr. Pat Mellon

Yes.

An Cathaoirleach

Plus it was the "shower up in the Dáil" that changed it.

Mr. Pat Mellon

Yes.

Mr. Seán Moynihan

I might address the housing issue and my colleague will address the income element. From our point of view, in older age housing means safety and security which applies to all of us because we all will face challenges in life. We all know income will drop because we will all at some stage be bereaved of friends, family or partners or we will all face health issues. For us, we need to change completely. The reality is that we can nearly solve the housing crisis through providing housing for an ageing population. Access to social housing, etc. is only for people who meet a certain criteria. People always talk about rightsizing and downsizing but where do people go? What we can do is keep pensions in communities, build housing for older people and give people a wider choice in where they might want to live in older age, while providing safety and security.

Two big things have happened in Ireland. We have had a change in family size or household size and we have an ageing demographic so we need to do a deep dive on the impact on the State in the next 20 years. In the past few years, the Central Bank has done an amazing amount of work on what a green economy and carbon change will mean for the economy and our society going forward. We need to do the same thing for an ageing population and changes in household size in terms of financial costs and benefits.

Ms Gráinne Loughran

On the disability allowance and non-contributory pension, these means tests use different rules to assess capital, which does not make sense. In terms of small farmers - I am from a rural background myself so I know all about this - the vast number of anomalies within the system is a function of the system that has been designed on a piecemeal basis. It was not designed with people in mind but was based on numbers, bits of income and a nod to how we enable people to access the system, particularly older people.

In terms of older people with savings, as I mentioned earlier, about half of older people living alone have savings of less than €8,100 and the cohort of people with which we work are generally in that lower income group. When we retire, and as our money goes down, suddenly we might need somebody to, say, clean the gutters or do a bit of painting when previously we could have done that ourselves, so housing standards will go down.

On social housing, the drop in income upon retirement is one of very few income drops during our lifetime that we can plan for as we know about it in advance. We do not know whether we will get sick or something will happen and we will need to move jobs. Retirement is something that we can plan for but we are not planning for it, particularly in terms of housing and access to social housing. People will know in advance of their retirement that they are renting and will be wondering what they are going to do in four or five years' time but we are not changing social housing eligibility to address that and to enable people to plan for that. This is an issue we have previously mentioned to the Department of Housing, Local Government and Heritage and we need to take it into account going forward.

Deputy Donnchadh Ó Laoghaire

I wonder whether any of our guests have encountered a case that concerns means-testing for medical cards. I can say the means-testing on the social protection side is okay and fairly recently, the fair deal scheme was changed to allow people to rent out their homes. Recently I encountered a case where a woman was availing of the rightsizing scheme, which is a very beneficial scheme for both the person rightsizing and the family who can benefit from having a three-bedroom house or whatever. The disregard for savings and assets for the medical card is only €36,000 so, naturally, when a person is disposing of the previous property to the council, under the rightsizing scheme, then the medical card is at risk even though the move is a significant change in lifestyle. To be fair, on the State pension side there is an exception to the State non-contributory pension as a person can have up to €190,000, where the property has been disposed to find more suitable accommodation. That is exempt but there is an issue with the medical card. I raise this issue as part of our broad consideration of how these things all interact.

An Cathaoirleach

The biggest problem is that the medical card income thresholds have not been reviewed in 20 years.

Deputy Éamon Ó Cuív

Although the capital side is fine for medical cards.

Deputy Donnchadh Ó Laoghaire

It is both. Even if one increased things it would not necessarily address that whereas to be fair, the State pension side has looked at circumstances like that and accounted for it.

An Cathaoirleach

The difficulty is the social welfare rates are now over the medical card rates. If one takes it based on social welfare, then one is over the limit for a medical card at the moment.

Deputy Éamon Ó Cuív

There is one difference with the capital. Let us say there is €100,000 of capital. In the case of social welfare, for a pension it counts as €270 a week. If one takes the same €100,000 and put it in the bank, and for the medical card there is an option to do it for real interest earned, so if one got a 1% interest rate on one's capital then it is €1,000 a year or €20 a week, against the €270 a week. So very few people get caught on a medical card by capital but they do absolutely get destroyed on social welfare.

An Cathaoirleach

I wish to make one final comment and I will allow everyone to make a final brief comment. As this committee is due to finish at 4 o'clock we have a tight schedule.

One of the clear issues to arise this morning is the call to reintroduce information officers within the Department of Social Protection. That was a tool that could provide advice right across the system but that is not there today. A reintroduction of information officers would significantly improve access to schemes. The unit is independent of the Department so information officers can provide independent advice.

As a constituent of mine was mentioned this morning, I will refer to the case. We did raise the case at our committee meeting three weeks ago when we had in an official called Mr. Niall Egan regarding the issue where a pensioner is being denied the State non-contributory pension because she pays for the care of her husband who is in a nursing home for the long term as part of the fair deal scheme. The Department has given a commitment to review the case and the legislation that governs same. Any solution will require an amendment to either the primary or second legislation. The case is being actively looked at because it is unfair that this person is effectively paying twice for the same care in a nursing home. I suggest we hear final comments from the representatives of the Irish Senior Citizens Parliament, Age Action Ireland and then ALONE.

Mr. Pat Mellon

It has been great to have the opportunity to come in here and be heard. It is very clear to us that members understand this complex issue of retirement as there are so many different schemes. The Cathaoirleach suggested it is important to ensure information officers are available. Such an initiative would take an awful lot of pressure off our phone system as it is that ease of personal contact.

Ms Mary Murphy

On Deputy Ó Laoghaire's question about medical cards, he was very concerned about the situation with medical cards and the lack of co-ordination between it and the social protection payments. I wish to flag that there is an anomaly and inequity within the pensions system itself because while there is the capital disregard for proceeds from the sale of a primary dwelling for the non-contributory pension, there is not for the increase for a qualified adult, IQA. People on that do not benefit and so even within the pensions system, there is that inequality.

Mr. Seán Moynihan

From what we have heard, a lot of us are unified on the benchmarking of the pension, back office ease of access and a change of philosophy on the basis of what we want to create. I sort of feel for the officials in the Department because of the number of older people and how everybody has a unique journey of life, different income and everything else. The officials must be wrestling with all these things trying to means-test across eight or nine different things and it is nearly impossible to legislate. If we reverse the philosophy then we do not have to grapple. We give people what they are entitled to in an easy way and if people have income over a certain threshold then ultimately it can be taxed as is done in other ways.

The final thing we would say is the housing needs of older people need to be looked at because ultimately from a social protection perspective that is where the real problem in the long-term future is with an ageing demographic.

Dr. Nat O'Connor

I have one quick point on the information officers. It is important to bear in mind that many people have come from the EU and outside it to make Ireland their home. In the next ten to 15 years we are going to see a great number of people reach retirement age who are either EU workers or non-EU ones who have made Ireland their home and who are here, so it will be very important to have the information available to them about how our system works. Many of them will have come here to work and will not have been using social protection, so it will be their first engagement with the social protection system. They may also fall foul of some eligibility and means test rules, especially those who came here in the middle of their working career and did not build up the full entitlement. Information will again be really important to that rapidly-growing cohort of older person.

An Cathaoirleach

I thank Dr. O'Connor.

I thank ALONE, the Irish Senior Citizens Parliament and Age Action for their contributions and evidence. The committee will now go into private session to consider other business.

The joint committee went into private session at 12.32 p.m. and adjourned at 12.52 p.m. until 9.30 a.m. on Wednesday, 17 April 2024.