I welcome the Minister, Deputy Humphreys, to the House.
Social Welfare (Miscellaneous Provisions) Bill 2023: Committee and Remaining Stages
Sections 1 to 7, inclusive, agreed to.
NEW SECTION
Amendments Nos. 1 to 7, inclusive, are related and may be discussed together by agreement. is that agreed? Agreed.
I move amendment No. 1:
In page 6, after line 29, to insert the following:
“Report on extending availability of full parent’s benefit to lone parents
8. The Minister shall prepare and lay a report before the Houses of the Oireachtas on extending the availability of the full duration of parent’s benefit to lone parents to examine the effect that enabling all children to equally avail of the full duration of this benefit would have and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.
The Minister is very welcome. This amendment is to provide for a report on extending availability of full parent's benefit to lone parents. There is an assumption in legislation like this that families are always a two-parent family. That is not always the case, as we know. I ask, as one-parent organisations have asked, that the full 14 weeks of parent's leave, increasing to 18 weeks in August 2024, be extended to one-parent families. A new baby, whether it is born into a family with two parents or one, should not lose out on the additional supports. I ask that the Minister address that particular point and issue.
I thank the Senator and call Senator Black.
I would like to speak to amendment No. 5. Is that okay?
No, we are speaking to amendment No. 1 at the moment.
I am sorry; I will wait.
I call the Minister.
I do not propose to accept these amendments. Regarding amendment No. 1, I refer the Senators to a report already prepared on this matter at the request of Deputy Kerrane, which I laid before the Houses of the Oireachtas on 27 June 2023. This amendment arose on Committee Stage in the Dáil, where I informed Deputy Ó Laoghaire I would be happy to provide him with a copy of the report. I can also provide the Senators with a copy if that is acceptable.
Amendment put and declared lost.
Section 8 agreed to.
Sections 9 to 13, inclusive, agreed to.
SECTION 14
Question proposed: "That section 14 stand part of the Bill."
The Minister is very welcome to the House. I submitted an amendment on section 14 of the Bill, which deals with the dreaded class K PRSI. It has been ruled out of order because of the cost to the Exchequer.
Members of this House who have gone to the dentist to get their teeth cleaned have come to me about PRSI. They are paying €386 in PRSI and cannot get dental care. It was suggested in a rebuttal here last year that we can make voluntary contributions. I ask those advising the Minister whether they would be prepared to pay 4% of their salaries in PRSI contributions and then pay another €5,000 in voluntary contributions. According to the Department, if you have been paying PRSI at class A, you cannot buy at the lower rate; you must make voluntary contributions at the higher rate.
We have already been down in the Four Courts about this issue concerning county councillors, and the Minister's Department settled the case. Has she been advised on the constitutionality of class K PRSI? Has her Department been advised it is unconstitutional? Nobody I know of would pay for an insurance policy on which they could never draw down. Can you imagine having an accident in your car and being told by the insurer it is not covered as part of your policy? Can you imagine being told that you cannot claim on your policy if your house burns down because it is just a contribution? If the State wants to tax me for being a Senator, it may do so. It could make provision for this in the Finance Bill. If I am charged 4% of my salary for the pleasure of being a public servant, I will happily pay it because I have a very wonderful career here that gives me an opportunity to speak to Ministers face to face; however, for God's sake, let us not try to pretend to anybody that class K is pay-related social insurance. It is not and cannot be under any circumstances.
I have been raising this in the House every year in discussions on the Social Welfare Bill and asking for an amendment so we may be treated the same as any other workers in the State. I am deeply disappointed a decision has been taken not to repeal class K and put us on the same footing as any other workers in the State. I have been forced into circumstances in which I have to put my family's welfare at risk because I am not going to sit down under this. I will take this matter to the High Court. Has the Minister been advised by her officials as to the constitutionality of class K PRSI? This is something we need to establish straight away.
I remind the Senator that section 14 relates to the working family repayment? We gave the Senator a little latitude on class K.
Does Senator Burke want to contribute?
I want to discuss class K also.
In fairness, I have given a little latitude on this. Section 14 is about the working family payment, not class K. I gave Senator Craughwell a bit of latitude.
The Senator had submitted an amendment on this.
That was ruled out of order.
While I do not question the ruling made by the Cathaoirleach, I ask him to reflect on the fact that moneys collected under the social welfare legislation are not a charge on the Exchequer. Moneys paid for dental or other treatment that are collected through the social welfare system are not a charge on the Exchequer. I do not think the ruling is proper in that regard. I have to support Senator Craughwell on this.
We can raise that with the Cathaoirleach if the Senator wants.
I thank the Acting Chairman.
I have to agree with Senator Craughwell. I have raised class K on numerous occasions also. It affects every Member of this House and others. After the last election, the majority of people who lost their seats or retired were not even able to collect the jobseeker's benefit after doing so. This is a considerable indictment of the political system. Some of the individuals were here for only a very short period. To have lost their seats with no means or income was an issue. Some had families. It is very unfair, so the Minister should reconsider class K. There should be some benefits from the PRSI that Members pay, as has been said by Senator Craughwell.
This has affected many Members who lost their seats at the last election. It is a very unfair tax, amounting to 4% of one's salary. To qualify for benefits, do we have to pay a voluntary contribution on top of the 4% Members pay? It is a very unfair tax. As Senator Craughwell said, it has to be unconstitutional. I ask that the Minister look into class K. In fairness to the current Taoiseach, he did examine the issue in respect of local authority members when he was Minister for social welfare, and he made a change from class K to class S. In light of that, I ask the Minister to consider class K in respect of Members.
If the Minister wishes to reply, she may.
I hope to contribute on this also, if the Chair does not mind. I promise I will be very brief.
I am giving latitude. We are time bound this evening.
It is not often that I agree politically with my colleagues but I certainly agree on this. It is a grossly unfair issue that should have been dealt with years ago. It is not right. This is felt deeply across the Chamber.
I acknowledge the issue raised. Senators Craughwell and Burke have raised it with me on several occasions. I know there are other interested parties here also. They have long-running concerns regarding the payment of class K contributions by public office holders. The introduction of class K for public office holders was a solidarity measure introduced among other income-generating initiatives in budget 2011, during the financial crisis, with PRSI acting as the mechanism for collection. Several other measures were also introduced during the financial crisis, and some of these, such as the USC, are still in place.
There seems to be cross-party support on this. I am happy to hear that. Class K was introduced as a solidarity measure involving Oireachtas Members during the financial crisis. In that regard, perhaps this matter should be considered as part of the wider public sector pay restoration agreement. Talks on this are under way. Maybe it is in these talks that progress should be made on this. I have given this a lot of consideration over the past year.
If there was a Private Members’ Bill with Members from every political party attaching to it, this could be considered, in particular for those on class K who are officeholders in this House, and I know there are also members of the Judiciary on class K. All in all, there are 100,000 people on class K, believe it or not.
Is that so?
There are. There are 100,000 across the board, and I have checked that. There are other people who use the benefits of class K in the private sector as well, so it is not just ourselves.
What we are dealing with specifically is the issue where people who had served in this House found themselves out of a job, with no income and no prospect of a job during Covid. I am well familiar with the case that the Senator has referred to at times and I have great sympathy for the person involved because they did not get back to this House after the last election. Perhaps it is something the Members could come together on. The Senator prepared a report that went to the Oireachtas joint committee, which raised a number of issues. If something more definitive comes forward on an all-party basis, I am happy to look at that. I have sympathy with regard to the points the Senator is making.
Class K is constitutional because an Act was brought through the Oireachtas in 2011 and signed by the President. It is there. This was an extra tax on officeholders and a number of members of the Judiciary at the time, and other people use class K for other reasons and are happy to pay into it. I take the Senator's point. I will leave it at that. Maybe we can look at it in the coming months and the Senator can come forward to me with proposals as to what he thinks we should do. I believe it should be looked at in terms of the wider public service pay restoration.
I want to-----
No. I gave some latitude to allow the Senator in. It was ruled out of order. It is the wrong section. The Minister has clearly answered the Senator. She shares his concerns. She has given him a pathway for how to progress this issue in regard to class K. I acknowledge the work he has done on this issue for a long time but we are very much time-bound this evening and I need to move on.
I just wanted to thank the Minister for her direction. I will work across all parties and, hopefully, bring forward a Private Members’ Bill early in the new year.
Question put and agreed to.
Sections 15 to 20, inclusive, agreed to.
NEW SECTIONS
Amendments Nos. 2 and 5 are related and may be discussed together, by agreement. Is that agreed? Agreed.
I move amendment No. 2:
In page 11, after line 34, to insert the following:
“Report on establishing a social welfare adequacy commission
21. The Minister shall carry out a review on establishing a social welfare adequacy commission in order to ensure social welfare rates meet the Minimum Essential Standard of Living (MESL) to study the effect that adequacy of social welfare rates could have on addressing poverty levels and that the report shall be presented to the Oireachtas Joint Committee on Social Protection ahead of Budget 2025.”.
To clarify, can I also speak on amendments Nos. 3 and 4 at this point or are they separate?
Not at this point. This is just on amendments Nos. 2 and 5.
We propose the establishment of a social welfare adequacy commission that would advise the Government on social protection payment rates. The commission would make recommendations on payment rates ahead of the annual budget with the aim of ensuring they are adequate, meet a minimum essential standard of living, MESL, and protect people from poverty. This would ensure that all recipients are protected from poverty. It is important to note that these rates can fluctuate upwards and downwards depending on inflation and the success of any Government in providing affordable housing, childcare or access to free healthcare when needed. Second, we propose that all currently means-tested payments are set at rates that meet the MESL to ensure that those who rely on these payments are protected from poverty, at the very least.
Sinn Féin has put forward the idea of establishing a social welfare adequacy commission for several years. We have introduced legislation on this on two occasions and included the proposal in our most recent general election manifesto and subsequent annual alternative budget publications. The commission would have three objectives: to reduce poverty; to ensure a decent standard of living for vulnerable households; and to take the political football out of setting social welfare rates. It would offer evidence-based advice to the Government in advance of making decisions as part of its annual budget. A social welfare adequacy commission would recommend payment rates with the aim of ensuring that everyone in receipt of a social welfare payment receives an amount that protects them from poverty and affords them a decent standard of living.
The objective would be to ensure that any future changes to rates are evidenced-based and targeted at protecting those who need it most. By ensuring continued monitoring of the adequacy of social welfare rates, the commission would help to advise any Government that, in turn, could make decisions to truly lift households out of poverty. This would see a major transformation of society overall. While the main role of a commission would be to report annually on the adequacy of social welfare rates and recommend any necessary changes, it should also have the power to recommend that any Department undertakes a poverty impact assessment of a specific measure before it is introduced. This proposal has been welcomed by organisations such as the EAPN 25.
Sinn Féin believes that the establishment of a social welfare adequacy commission would be hugely significant for those who rely on social welfare supports from the State. Its establishment would create a pathway away from the annual political football in the setting of social welfare rates. Further to this, a commission could support the work of the Government in its efforts to support the needs of specific groups and those who currently experience the highest levels of poverty, deprivation and marginalisation.
Amendment No. 5 seeks a report on the adequacy of social protection payments and options for benchmarking social protection payments to the minimum essential standard of living. This year, the MESL research centre had recommended a €27.50 increase to core adult social welfare rates but, instead, what we got in the budget was €12. In its post-budget analysis, the MESL research centre noted the purchasing power of core social protection supports had not been maintained and, as a result, the adjustments are a real-terms cut. From 2020 to 2023, the real value of core working-age weekly social welfare supports has fallen by six to 12 percentage points. These measures are likely to compound the deepening and widening of income inadequacy that developed this year so it is clear that the core social welfare rate increases this year were, in fact, a real-terms cut. Others have affirmed this. The ESRI this year noted in its post-budget analysis that low and middle-income households are still in a catch-up phase after successive below-inflation increases to social welfare and tax. Increases in social protection rates are simply not keeping pace with inflation.
The ESRI also said that with inflation moderating, there is a need to move away from one-off payments and to benchmark social welfare payments to provide certainty. This ESRI recommendation for benchmarking of social welfare payments, rather than an overreliance on one-off measures, is a call that is echoed across civil society. People need income adequacy and income security. Security means consistency and it means certainty. We often hear budgets being called “bumper” or “giveaway” budgets in the media, and we hear the figure quoted again and again for the overall budget package, whether it is €10 billion or otherwise in a given year. However, income adequacy is about consistency. We can only have income adequacy if everyone, including those receiving social protection payments, knows they have enough money coming into the household, week in, week out. That certainty and security does not come with one-off payments that people do not know are coming again next year or the year after.
As we call for every year in the social welfare Bill, we must see social protection payments raised substantially, not just by a few euro each year but to a meaningful level that is calculated to meet the needs of families. Once rates are raised to that level, they need to stay there and we need an adequate rate of social welfare paid, week in, week out, and not via once-off payments. The MESL provides a benchmark for this truly adequate rate of social welfare and we need to begin using this to guide social welfare policy. Every year, after the budget, we see the new social welfare rates compared to the MESL benchmark rates and, every year, we see that they are too low, and this is after the fact.
Why is the MESL not being used to guide the budget measures in the first place? The Government is urged to look to this research every year in advance of the budget but every year we see that the recommendations are not followed. There is no excuse anymore. We had the second-largest budget surplus in the EU this year and we are on track to accumulate a surplus of €65 billion by 2027. That figure is staggering. If not now then when will truly adequate social protection rates in this country ever be a priority for Government?
Senators will be aware that the work of the Vincentian MESL Research Centre, which is sponsored by my Department, is an assessment of the minimum income needed to partake in everyday life. The work of the MESL research centre also highlights issues that may be better solved with greater access to services, rather than increases in income. In this regard, having access to secondary benefits such as medical cards and supports in the areas of housing and childcare has a huge impact on well-being. Therefore, using the MESL as a benchmark for the level of social welfare payments alone can present difficulties. For these reasons, while not used as a benchmark in and of itself, the work of the Vincentian MESL Research Centre at the Society of St. Vincent de Paul is, and will continue to be, a valuable input into our policymaking process.
On an annual basis, my Department already assesses the social impact of the annual budget process, including in recent years the impact of once-off measures. I give the Senators a commitment that we will publish, in quarter 1 of 2024, a detailed social impact assessment of budget 2024, including the main tax and welfare measures, using the ESRI’s SWITCH microsimulation model, which will set out the poverty alleviation impacts of the budget measures for various cohorts and family types.
For those reasons, I do not propose to accept these amendments. I understand why the Senators have to put amendments in this way but I would prefer not to put reports into legislation. The ESRI has said that the budget protects those on the lowest incomes the most. This matter has to be looked at it in the round, in terms of the core increases to weekly payments and the lump sums. The €12 increase in the core weekly payments will take effect from January. Over the last two budgets alone, we have increased the weekly payments by €24. In recent years, a €3 increase used to be the norm, or maybe there was no increase at all. A €24 increase over the last two years is, therefore, a substantial amount of money.
This year's budget has to be looked at in the round, taking into consideration the combined effect of the lump sums and the increase in the weekly rates. For example, an old-age pensioner who lives alone will get the funeral allowance; the €200 living alone lump sum; the €300 fuel allowance lump sum; a double payment at Christmas; a double payment in January; and, on top of that, a €12 increase in the weekly payment. That adds up to an extra €1,700 annually and approximately €32 extra per week. A carer will get the two double payments at Christmas and in January, the €400 carer's lump sum and the €12 increase in January, which works out at about €1,500 extra over a whole year or approximately €30 extra per week. That figure will be much higher for those with children because they will also get the €100 qualified child lump sum and the double child benefit payment. Somebody on a disability allowance who lives alone will receive an extra €2,020 over the year, which works out at about €39 extra per week.
As I said, the work of the Vincentian MESL Research Centre at the Society of St. Vincent de Paul will continue to be a valuable input to our policymaking process. On an annual basis, my Department assesses the social impact of the annual budget process, including, in recent years, the impact of once-off measures. That does not include the lump sums for fuel allowance and electricity credits. We continue to monitor this matter closely.
Amendment put and declared lost.
I move amendment No. 3:
In page 11, after line 34, to insert the following:
“Report on means-testing for blind pension and disability allowance
21. The Minister shall prepare and lay a report before the Houses of the Oireachtas on the means-testing eligibility requirement for blind pension and disability allowance and the impact that income threshold limitations have on access to these schemes and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.
The Government has committed to reviewing the means-testing of payments but there is not yet any information on when this will happen. Social assistance payments are available to those who do not have enough PRSI contributions to qualify for equivalent social insurance payments. For example, someone who becomes unemployed but fails to qualify for jobseeker's benefit due to insufficient PRSI contributions can apply for jobseeker's allowance instead, which is means-tested. However, as entire household income is considered as means, it can be difficult to qualify for the full rate of €220. Even the highest rate of payments does not take into account the varying costs experienced by households across society.
The concentration of deep income inadequacy is due to the current structure of our social welfare system. Existing rates of social assistance payments do not adequately support even a minimum essential standard of living. The existing system of determining rates underestimates the cost of ensuring an MESL and we see this exemplified in households with children headed by one adult when calculating rates of means-tested welfare payments. This means the current system for determining social assistance is flawed and must be replaced with a comprehensive model to ensure social welfare supports are fit for purpose. Sinn Féin believes that social assistance payments, which are typically subject to means testing, must be based on ensuring a decent standard of living. We propose ensuring that all currently means-tested payments are set at rates that meet the minimum essential standard of living in order to ensure that those who rely on these payments are protected from poverty at the very least. We must also bear in mind the cost of disability that people on blind pension and disability allowance are subject to.
I am pleased to inform Senators that I have already committed to a wide-ranging review of means-testing in my Department, which is ongoing. I expect that to be completed in quarter 1 of next year and I hope to have it early next year. The review will cover the treatment of income and disregards across the social welfare schemes generally. It will include the examination of thresholds and their impact, the blind pension and the disability allowance, including in respect of self-employed workers. For those reasons, I do not propose to accept this amendment but Senators can be assured, in line with a similar commitment I gave in the Dáil debate, that this issue will be considered in that review, which will be published early in the new year.
I welcome what the Minister has said. An anomaly in the system that I have raised on a number of occasions is where a person who is between jobs is called for jury service. I hope the Minister will be able to address the matter in the Bill. The case I raise involves a girl who was changing jobs and found there was no onus on her previous employer to pay. She did jury duty for a week, during which there was no obligation on her previous or new employer to pay, meaning she fell through the cracks. She suffered lost wages and had a mortgage to pay, as well as having all the other outgoings that families have. She was at a loss of a considerable amount of money. Despite paying her taxes, she did not qualify for anything. I ask the Minister to look at that.
I welcome the review, especially as regards the means-testing of carer's payments, which is an issue we have raised in this House on numerous occasions. It needs to be looked into to ensure it is fair for carers and those they are caring for.
The second issue I raise is the thresholds for the fuel allowance. There are many ancillary benefits available to people who qualify for the fuel allowance, so many people attend our clinics whose incomes are out by a small amount. I ask the Minister to allow for some flexibility in providing for a lower rate of fuel allowance. It would be great to have the fuel allowance and its ancillary benefits reviewed.
I do not know how it could be done. Perhaps if people were still under the threshold, they could still qualify for some of the benefits, such as wrapping the house. It is a big thing for people. We are trying to give funds for retrofitting and it is hard to get them to the right people. These are the right people.
I thank the Senators and take the point Senator Burke raised. That is a case that fell between the cracks and we should look at it. That one was just unfortunate. It is important that we review the means test. It has not been reviewed in a long time. A lot of work has gone into it in my Department, looking at the different assessments for the different payments. There are many different ones. I expanded the fuel allowance last year for the over-70s. I changed the income limits. I also increased the limits for the carer's allowance in this year's budget. When this went through the Dáil on Committee Stage, we had a discussion about doing something on a graduated basis. I am prepared to examine that because when we draw a line, there are winners and losers. That is always a problem. I always feel sorry for people who are a euro or two over the limit, especially with the fuel allowance. It cuts them out. Maybe we should look at a more graduated system so that if someone's income is X number of euro above the limit they get a reduced payment. It is all in the mix. It will have budgetary consequences and it all must be considered together. I happy to look at it.
Savings of €20,000 is a small enough sum now. It used to do a lot, but it does not do a lot now. It is a lot of money, but the way I measure it is that it used to be possible to buy a really good car for €20,000. You would not get much now for it. It is the limit on savings, so there is an opportunity there. I agree that we need to look at that. I will have the report in quarter 1 of the new year and I will be happy to come back to talk about it then.
Amendment put and declared lost.
I move amendment No. 4:
In page 11, after line 34, to insert the following:
“Report on extending the provision of disability allowance to agents in case of bereavement of child
21. The Minister shall review the rule regarding the continuation of disability allowance payment where a person is the collecting agent for their child who passes away and prepare a report on extending payment of the payment for six weeks in these circumstances in line with the provision made for payments such as domiciliary care allowance and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.
The amendment calls for the provision of disability allowance to agents in the case of the bereavement of a child. The spouse, cohabitant or child of someone who is in receipt of disability allowance can receive the payment for six weeks after the death of the claimant, but the collecting agent of someone who is in receipt of disability allowance, for example, the parent of a 16-year-old who passes away, has difficulty receiving the payment for six weeks after the death of the claimant. On Committee Stage in the Dáil, the Minister said that she is aware of such a case and will look at resolving this matter. I tabled the amendment is that context.
The Senator will be aware that I responded to a similar amendment on Committee Stage in the Dáil. I committed to looking at this area and to preparing a report for Deputy Ó Laoghaire. I have asked my officials to look at the matter and complete a report on it - I even put a timeframe on it - by June of next year. As the Senator said, I am familiar with this case. While I have huge sympathy for the person involved, it is fair to say that a collection agent collects the payment for the recipient. They are not the person who it is intended will get the payment. However, I understand the specific case of a mother who was looking after a child who passed away. It is a sad case. I am happy to carry out a report on it.
I will be honest; I am a little unclear. The Minister gave a positive response. Is she accepting the amendment or is she just commissioning a report?
That is fine.
No, I am not accepting the amendment. I did-----
In that case, I will withdraw the amendment, given the Minister's positive comments.
I will do the report.
Amendment, by leave, withdrawn.
I move amendment No. 5:
In page 11, after line 34, to insert the following:
“Report on adequacy of social protection payments and Minimum Essential Standard of Living (MESL)
21. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas and the Joint Committee on Social Protection a report on options for increasing and benchmarking all social protection rates in line with the Minimum Essential Standard of Living (MESL), including an analysis of options to fund such a measure through increased employer contributions to the Social Insurance Fund, and analysis of the impact of such a measure on poverty rates and inequality.”.
Amendment put and declared lost.
I move amendment No. 6:
In page 11, after line 34, to insert the following:
“Report on Universal Basic Income for care-leavers
21. The Minister shall, within 6 months of the passing of this Act, prepare and lay before both Houses of the Oireachtas and the Joint Committee on Social Protection a report on options for introducing a Universal Basic Income scheme for care-leavers.”.
More than 600 care leavers signed up to a universal basic income pilot scheme in the UK in the past year. One of those participating in the scheme who was interviewed by the BBC said it gave her independence. She explained why it gave her security and freedom. She said: "At the end of the day, leaving the care system and not having the financial worry is quite a big deal, not knowing where your food is coming from, where your rent is coming from." The amendment calls for a report to explore the introduction of such a basic income scheme for care leavers in Ireland. Such a scheme could provide a safety net for many young adults leaving care who often do not have the same parental financial safety net as other young adults. Financial security is identified as one of the key needs for young adults leaving care. Barnardos UK highlighted that care leavers often have far poorer outcomes than their peers. By the time they reach 19 to 21 years old, four in ten are not in education, employment or training. Many suffer with poor physical and mental health and are at greater risk of suicide. It also highlighted that 25% of the homeless population are estimated to be people who have experience of being in care. These are the reasons the basic income scheme was piloted in the UK.
In March of this year, the Irish Department of children published a literature review that included an examination of Irish studies on outcomes for young adults leaving care. It said that Irish studies linked greater difficulties and poorer outcomes in important areas of life, such as mental health, relationships and homelessness to having experience of being in care. Young adults who leave care in Ireland face similar barriers and obstacles. I urge the Minister to consider the benefits of such a basic income scheme for young adults leaving care in Ireland. Such a scheme could ensure the security, safety and future prosperity of young adults.
I recall a friend of mine, Shane, who died by suicide a few years ago pointed something out to me. I talk about supports in relation to social class and poverty and I remember saying that gaining work experience for people from particular communities or schools can be difficult. Many people in local areas and communities will end up doing work experience in the factory across the road where their mam or dad worked or perhaps in the local Centra. He said something poignant to me, that many people with experience of care, do not even have a family member working in Centra to help them to look for work experience in Centra. When I was looking for diversity of work experience for people who have a home and family around them, it was an interesting thing to have to think about. If someone is a care leaver or a person experiencing care, sometimes accessing low-paid or local work is extremely difficult, never mind being able to think about opportunities above and beyond that. Many people who leave care are in homeless accommodation and live in hostels. They leave State care where the State was effectively their parent for a period. That becomes obsolete if the person does not go on to education, which can be extremely difficult if he or she does not have a safe environment in which to be able to engage in education.
We should look at the pilot scheme in the UK and potentially carry out some similar research in Ireland. Perhaps the Department could look at what the benefits would be of having a pilot scheme in Ireland under which we would look at a universal basic income for people leaving State care.
.
Deputy Heather Humphreys: I fully accept the point the Senator made. However, I do not propose to accept the amendment. Policy for this issue falls under the remit of the Department of children. It has come up in the past. For example, the line Department led on the basic income for artists, under the Minister, Deputy Catherine Martin. I discussed the matter with the Minister, Deputy O'Gorman, and he has spoken to his counterpart in Wales. A pilot scheme was done there and it worked out well. A report is being written about it. I think Scotland is looking at doing something. Young people leaving care need additional support to help them on their way and give them the confidence to go forward.
It is something the Senator can raise with the Minister, Deputy O'Gorman, in the context of children in care. As I said, it is a matter we have discussed.
In the Department of Social Protection, unlike in other Departments, age-related jobseeker's allowance rates do not apply to those who were in care during the 12 months immediately before they turned 18. That means people are entitled to the support of the higher weekly rate, which will be €232 from January 2024. Of course, they can avail of additional needs payments to support them in their accommodation requirements and other necessary supports when leaving care, if needed. It is to help them when they are leaving the care system and starting to live independently. They need that support and I accept that. As I said, the Minister, Deputy O'Gorman, has considered this matter. I ask the Senator to raise it with the Minister directly. I cannot accept the amendment.
I raised this issue in the committee. It would be on the Minister's radar. I thought there might be some crossover or intersection where a person is 18 and leaving care. Some people, when they leave care at 18, might not necessarily avail of one of the aftercare housing schemes and so on. Some may not come under the umbrella of what falls under the Minister's Department. I may be wrong in thinking that and such cases might fall under social welfare in the case of an independent adult who is no longer receiving aftercare from the State. Some people may need to be captured in both systems. I will continue to pursue this matter.
Amendment put:
The Committee divided: Tá, 9; Níl, 22.
Tá
- Black, Frances.
- Clonan, Tom.
- Craughwell, Gerard P.
- Flynn, Eileen.
- Gavan, Paul.
- Ruane, Lynn.
- Sherlock, Marie.
- Wall, Mark.
- Warfield, Fintan.
Níl
- Ardagh, Catherine.
- Blaney, Niall.
- Burke, Paddy.
- Casey, Pat.
- Cassells, Shane.
- Chambers, Lisa.
- Conway, Martin.
- Crowe, Ollie.
- Cummins, John.
- Daly, Paul.
- Doherty, Regina.
- Dolan, Aisling.
- Dooley, Timmy.
- Fitzpatrick, Mary.
- Garvey, Róisín.
- Kyne, Seán.
- Lombard, Tim.
- McGahon, John.
- O'Reilly, Pauline.
- Seery Kearney, Mary.
- Ward, Barry.
- Wilson, Diarmuid.
Tellers: Tá, Senators Lynn Ruane and Frances Black; Níl, Senators Paul Daly and Regina Doherty.
Pursuant to Standing Order 57A, Senator Alice-Mary Higgins has notified the Cathaoirleach that she is on maternity leave from 19th June to 19th December, 2023, and the Whip of the Fianna Fáil Group has notified the Cathaoirleach that the Fianna Fáil Group has entered into a voting pairing arrangement with Senator Higgins for the duration of her maternity leave.
Amendment declared lost.
I welcome to the Public Gallery Ms Pippa Szepietowski, a cousin of our colleague and friend, Senator Seery Kearney, I hope she will excuse my bad pronunciation of her surname. She is here visiting from the United Kingdom. She is very welcome and I thank her for being here.
I move amendment No. 7:
In page 11, after line 34, to insert the following:
“Report on income adequacy of lone parent families
21. The Minister shall, within six months of the passing of this Act, prepare and lay before both Houses of the Oireachtas and the Joint Committee on Social Protection a report on the income inadequacy of lone parent households, including an analysis of the main drivers of income inadequacy among this group, and social protection measures which could address this inadequacy.”.
Is the Senator pressing the amendment?
I was not aware that amendment No. 7 was in the earlier grouping and had already been discussed with amendment No. 1.
It was announced and agreed earlier.
Okay, I will press the amendment.
Amendment put and declared lost.
Sections 21 to 44, inclusive, agreed to.
NEW SECTION
Amendments Nos. 8 and 15 are related and may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 8:
In page 23, between lines 33 and 34, to insert the following:
“Report in ensuring people aged 65 years of age have right to retire on State Pension Contributory
45. The Minister shall prepare and lay a report before the Houses of the Oireachtas on restoring the option on the right to retire for those aged 65 years of age on a State pension contributory and that the report shall be presented to the Oireachtas Joint Committee on Social Protection within 9 months of the enactment of this Act.”.
In recent weeks, we have seen announcements in terms of increases in PRSI for employees.
Our proposal to increase employers' PRSI on the portion of pay above €100,000 would immediately cover the cost of introducing a right to retire on a pension at 65 years of age.
If you have been working on your feet all day, whether it be in construction, hairdressing or retail, you deserve to have the choice to retire on a pension at 65. Voters sent that message loud and clear in 2020. Reluctantly, the Government parties - especially Fine Gael, which intended to raise the State pension age to 68 years - called off the previously legislated-for increases to the pension age. The Government introduced a payment for people who retire at 65 years but it is completely inadequate and is paid at €45 per week less than the State pension and €2,356 less over the course of the full year.
The various options developed and data gathered by the Pensions Commission made it clear that it is possible to put the Social Insurance Fund onto a sustainable footing and afford people a right to retire on a pension at 65 years of age. The fairest path to ensure the sustainability of our Social Insurance Fund is through graduated increases in the level of employers’ PRSI beginning with the portion of salaries above €100,000. Sinn Féin was the first party to put forward the issue of the sustainability of the Social Insurance Fund and the levels of social insurance contributions. In the teeth of a cost-of-living crisis, with workers facing elevated prices in the medium term, the focus should be on increasing the rate of employers’ PRSI.
It is not fair for the Government to expect people like blocklayers who has been laying blocks all their lives and cleaners on their feet all day, dragging the hoover around after them, to not have the right to retire at 65. In some instances, these people have been doing this work since they were 16 years of age. The Government expects people working extremely hard in tough physical jobs for decades to keep going beyond 65. This is simply not fair and the Government cannot expect people to just keep going and going. These people have put their shift in and deserve the right to retire on a pension at 65 years of age.
I will speak on amendments Nos. 8 and 15 together. Is that okay?
I was going to come in on amendment No. 15.
We will let the Senator in. Sorry, Senator.
Amendment No. 15 seeks a report on the restoration of the right to retire at 65. This right is fundamental to our social contract. For several years now, we have been bombarded by messaging around how unaffordable our current pension system is. We are being steadily primed by conservative voices to accept the degradation of something so fundamental to our comfort and dignity as humans, namely, the right to retire. We have been repeatedly told the slow erosion of our pensions is not an ideological matter, rather merely a technical one. The reality contradicts this framing, which is in fact deeply ideological.
According to the IDA and countless other reports, Ireland has the youngest population in Europe, with one third of the population under 25 years of age. Despite this demographic reality, we came very close in the last programme for Government to being one of the few countries in Europe to push the pension age up to 67. The only other states in Europe to have taken this step I believe are Italy, Greece, Germany and Norway. These are countries with either far older populations or far more difficult economic circumstances. Even with the current threshold of 66, we are still among the most regressive states in this regard.
One would never think this from listening to conservative voices. We are expected to believe the State pension is a luxury we are recklessly clinging onto. Despite the fact we are supposedly one of the wealthiest countries in Europe with a budget surplus expected to last for years to come and with one of the lowest pension burdens and youngest populations, we find ourselves unable to hold up our end of the bargain and unable to sustain our workers' right to retire. Rather than benefiting from the wealth that supposedly flows into our country, low-income workers around the country are told they must make yet more sacrifices at the end of their long working lives. They must work one or two years longer, and this is unacceptable. The framing that people at the end of their working lives - many after putting in decades of hard manual labour - must now defer their retirement for another year is purely ideological.
There are many ways the Social Insurance Fund could be topped up. Far higher social insurance burdens could put on the huge multinationals that make their billions here. Instead, it is workers who are asked to bear the burden, and this is wrong. Every worker in this country should have the right to retire at 65 and that right must be restored. I urge the Minister to accept this amendment.
I propose to take amendments Nos. 8 and 15 together. I am not accepting them and I will explain why. We just had the biggest report ever on pensions, which is the Pensions Commission report. We responded comprehensively to that by retaining the pension age at 66, introducing the new flexibility to allow people to defer their pension, providing a pension to long-term carers and the small, incremental increases in PRSI over the next five years, which will make the system more sustainable. We always said that in keeping the pension age at 66, because of the changing demographic, we would have to pay for that.
We are trying to make the pension system more sustainable in order that the young people of today can get a pension when they retire. The current system is pay-as-you-go and we pay for those who are pensioners now. That is the system in place and it will continue. We have the benefit payment for 65-year-olds. It is not means tested and someone can get it if they have their contributions.
The Government established the Pensions Commission, which looked at this issue and delivered a comprehensive report. The Pensions Commission concluded its detailed analysis of the State pensions system in late 2020 and recommended increasing State pension age rather than decreasing it. The Government decided not to increase the State pension age but instead leave it at age 66. In this regard, I do not believe a further report on State pension age is warranted at this time. The decision to retain the pension age at 66 means that PRSI increases will be required. The Government has set out the roadmap for increases over the next five years and that starts in October 2024. Those PRSI increases are required simply to retain the State pension age at 66.
Reducing the State pension age to 65 years would increase pension-related expenditure significantly. The estimated cost of introducing State pension payments at the age of 65 based on current pension rates is €355 million for one year only. In February 2021, I introduced the benefit payment for 65-year-olds. The benefit does not require a person to sign on, engage in activation measures or be available for and genuinely seeking work. The payment was designed to bridge the gap for people who retire from employment or self-employment at 65 years of age but do not qualify for the State pension until age 66. It is important to note that people under the age of 66 who cannot work for health reasons can apply for invalidity pension and disability allowance.
I take the point of the case of somebody who has a long work history and is genuinely not able to work. I am looking at it but I will have to bring proposals back to Cabinet on whatever I come up with. I understand the position particularly for the brickie who is not fit at 65 to haul bricks around. There are all kinds of new systems for construction but it is hard work and that is the bottom line. If they are self-employed, which many manual workers are, bringing back the transition pension would be of no benefit to them whatsoever, so that will not solve that problem.
We need to be honest with people on this. Every country in the world is struggling with pension demographics. Many countries have increased the pension age. In fact, the pension age was increased in Northern Ireland to 66. This Government is retaining the pension age at 66 and we are clear that we will need to pay for that with increases to the PRSI.
I ask for the Acting Chair’s indulgence. Amendment No. 7, tabled by Senator Ruane, sought a report on income adequacy for lone parents. I wish to tell her I am doing that report. I do not want to put it in legislation, but I will do the report.
Amendment put and declared lost.
Amendments Nos. 9 to 12, inclusive, are ruled out of order due to a potential charge on the Revenue.
Amendments Nos. 9 to 12, inclusive, not moved.
Section 45 agreed to.
NEW SECTIONS
I move amendment No. 13:
“Report on extending eligibility for long-term carer’s qualifying contributions
46. (1) The Minister shall, within 6 months of the passing of this Act, prepare and lay before both Houses of the Oireachtas and the Joint Committee on Social Protection a report on options for extending eligibility for long-term carer’s qualifying contributions to those who spent less than 1,040 weeks providing full time care to a relevant person or qualified child.
(2) A report under subsection (1) shall consider, inter alia—
(a) options for reducing the minimum number of contribution weeks from 1,040 to—
(i) 520 weeks, and
(ii) 260 weeks, and
(b) options for removing and minimising other obstacles to eligibility for qualifying contributions for carers of any duration, including time spent in education, weekly payments received and other matters.”.
The introduction of carer credits and the recognition of years spent caring in terms of pension contributions is welcome. We, in the Civil Engagement Group, have called for this for many years. Senator Higgins, in particular, has highlighted this issue year after year in the budget. The State of Caring 2022 report noted that taking on caring responsibilities results in long-term financial hardship, with the loss of income from employment exacerbated by higher household costs. Survey results from the report also showed that more than two in three, or 68%, of carers said they find it hard to make ends meet, while carers forego income to in order to take on caring responsibilities at home, making themselves economically vulnerable in the process. They are also saving the Exchequer millions of euro in return. This sacrifice made by carers has been totally unrecognised up until now, as the years spent caring were not recognised at all in terms of pension contributions, despite the fact that their caring work saves the State so much money. Finally, this injustice is beginning to be rectified.
I commend this measure and recognise the progress that is being made. This measure is a positive first step forward. However, we need to go a little further. Our amendment seeks to address concerns with the policy as currently drafted. It seems that many will still be left out by the measures that are proposed. Our amendment seeks a report on reducing the minimum number of required contributions and on removing obstacles to qualifying for the contributory pension. The minimum requirement of 1,040 weeks, or 20 years, of caring contributions is prohibitively high in many cases, and will mean that countless carers, who have spent three, five or ten years caring, will be excluded. These carers may have worked in employment for 30 years, and may have given up employment to take on a full-time caring responsibility for another ten years. Will these people simply fall through the cracks as they will not have sufficient employment or care contributions to qualify for the contributory pension? It does not seem fair if that is the case. The stated purpose of the policy is to cover gaps in the contribution record for carers. What if the gap is only ten years, and not 20? Why should these people be excluded from the contributory pension? Can the Minister clarify whether some sort of hybrid model will be adopted, whereby a combination of employment and carer contributions of any number of years can be used to qualify for the contributory pension, and if there is any scope for flexibility in the minimum contribution weeks?
Amendment No. 14, on a report on expanding recognition of long-term carer’s qualifying contributions, seeks a report on the potential to expand recognition of care contributions beyond pensions to other social protection entitlements. It is important to make clear that the legislation introduces long-term carer contributions only in respect of pensions, which means that any other social protection benefits which require PRSI contributions will not be accessible on the basis of care contributions. That means that the work of carers will not be fully recognised in its entirety. I will use the simple example of treatment benefit and the free annual dental check-up which we can get on the basis of our PRSI contributions, and which so many of us avail of every year. It would be wonderful if we introduced a model whereby care contributions were expanded to function like standard employment contributions, such that carers could also get contributions such as those that would fall under treatment benefits. I commend the very positive step forward being taken in terms of recognising care via the long-term carers contributions. It is something that we have called for for a long time. It would be wonderful to see the policy expanded even further, so that care contributions were captured elsewhere.
I welcome the Minister. Her focus is particularly on carers, as has been highlighted in the amendment. It has been absolutely crucial. As she will be aware, in rural areas it is family carers who are doing a lot of the work. It is very difficult to access carers in rural areas for many different reasons. Access for people living in city centres is a bit easier because there are more people available to do the work. In rural areas, that is just not the case, so it falls to families and family members to do the work.
I know that the Minister has been looking at the role of family carers. It is literally what she has brought through. She is looking at how to support families and, in particular, women who have been managing caring in the home to ensure that they get access to contributory State pension. I note that the income disregards will be enacted from June of next year. Those income disregards will be very important in terms of the income threshold for carer's allowance. The Minister might comment on the access to those supports. As far as I am aware, the disregards will be enacted in June of next year, but she might comment on that.
I am aware that the means test is something that the Minister is looking at for carers overall, because we know how much carers contribute. There is no price that can be paid to be able to keep a loved one at home. We see the grants that come through local authorities to make our homes more accessible, to adapt them and accommodate family members by putting ramps in or making bathrooms and showers accessible for those with disabilities. So many families go through this. What I have found, in my own area of Roscommon-Galway, is that sometimes families are not aware of the supports that are available through the local authority to help keep people at home. I am very much an advocate for independent living, so that people can live in their own home for as long as possible. Part of the Minister's remit in social protection is looking at how we support family carers because of the role they play. Given the lack of access to beds in nursing homes now, and the fact that patients cannot be discharged from hospital, family carers are important, just as the means test and income disregards are for them. I know that the Minister has been looking at this group in particular over the last number of years, with a view to ensuring that the carers means test is reasonable and will encourage and support family carers and women in the home, particularly around part-time access. Some of the questions I have are around cases where a carer has been working a certain number of hours per week, and whether they will be able to access those supports. I was contacted by a single mother with a full-time job in a hospital on the lower end of the scale who, unfortunately, was not able to access any sort of carer support for looking after her brother at home. How do we support those people? They are women who are usually in their 30s, 40s and 50s, who have young families, are working full time and also trying to take care of a loved one. That is the situation I see in my area.
I thank the Senators for their comments. I will speak to amendments Nos. 13 and 14 together. I do not propose to accept them. The Pensions Commission concluded its detailed analysis of the State pension system in late 2020 and recommended that long-term carers, which it defined as caring for more than 20 years, should be given access to the State pension contributory by having retrospective contributions paid for them by the Exchequer for any gaps in their contribution history arising from caring. The measures contained in this Bill are to implement this recommendation. In formulating its recommendations, the commission sought the views of recognised experts and representative groups by inviting presentations and submissions. In this regard, Family Carers Ireland and the National Women’s Council of Ireland made presentations to the commission on this particular issue of improving access to State pensions for long-term carers. As I said earlier, Family Carers Ireland strongly support the measures I am taking.
Regarding amendment No. 14, in reaching its conclusions, the Pensions Commission recommended that the contributions would be exclusively for State pension contributory purposes. Full-time carers can currently access a number of supports from my Department including carer’s benefit, based on social insurance record, or carer’s allowance, based on means. Both payments accrue credited contributions which can confer entitlement to certain other social welfare schemes. In addition, other non-means-tested payments available to full-time family carers include the annual carer’s support grant and the monthly domiciliary care allowance where relevant. Access to other social insurance payments is subject to the conditions attached to these payments and where a carer meets these conditions, they will qualify.
Where a carer meets those conditions, he or she will qualify.
I do not believe that further reports on carers and State pension provision is warranted at this time. A person who has provided less than 20 years' caring may be entitled to avail of home caring periods or the homemaker's scheme, subject to the existing qualification condition of having 520 paid contributions. This is to look after those who have provided over 20 years' caring. We do cater for those who have provided under 20 years' caring. Once people have worked for ten years, they can get credits for the time they spent at home, up to 20 years.
Carers can also work 18.5 hours per week and receive the full carer's allowance. Last year, I changed the means test and from June next year, I will change it again. I have increased the amount one can have in savings to €50,000 and have increased the income limits for both a single person and a couple. That is two years in a row I have increased those limits. The capital disregard is €50,000. The domiciliary care allowance, which is not means-tested, was increased by a further €10 per month in this budget.
I think I have covered all the issues that have been raised with me. I fully recognise the important role carers play in our society. The purpose of social protection is to provide people with a basic income. I cannot pay people for what they do. They do a lot of work. I have asked that we set up an interdepartmental group to look at the whole issue of carers because the Department of Health has a role to play here as well and there are other, non-financial supports with which we can improve the situation. I met with Family Carers Ireland and it is very happy with this. I am the first Minister in 20 years to have done anything about carers, and they are very pleased. Of course, there is more work to be done, but we have achieved quite a lot now to get this here and to make sure they get a pension because God knows they deserve it. What is better about this is that if you have been unsuccessful in the past in applying for a pension, you can now, after 1 January, once you can show that you have been caring, apply for the pension. If, say, you are past the pension age and did not qualify, you can reapply now once you can show that you were providing such care. I think in particular of a mother caring for a child with a long-term disability. The child passes on, the mother cannot go back to work at that stage because she is at retirement age, and she is left with no income because of her partner's income. I was very conscious of that, and this will make a difference to people in such positions, I believe.
Amendment put and declared lost.
I move amendment No. 14:
In page 25, between lines 30 and 31, to insert the following:
“Report on expanding recognition of long-term carer’s qualifying contributions
46. The Minister shall, within 6 months of the passing of this Act, prepare and lay before both Houses of the Oireachtas and the Joint Committee on Social Protection a report on options for expanding recognition of long-term carer’s qualifying contributions such that they may be recognised not just for the purposes of accessing the State pension (contributory) but also for the purposes of accessing other social protection entitlements.”.
Amendment put and declared lost.
Sections 46 and 47 agreed to.
NEW SECTION
I move amendment No. 15:
In page 30, between lines 7 and 8, to insert the following:
“Report on restoring right of persons aged 65 years to retire on State pension (contributory)
48. The Minister shall, within 6 months of the passing of this Act, prepare and lay before both Houses of the Oireachtas and the Joint Committee on Social Protection a report on options for restoring the right of persons aged 65 years to retire on State pension (contributory), including analysis of options to fund such a measure through increased employer contributions to the Social Insurance Fund.”.
Amendment put and declared lost.
I move amendment No. 16:
In page 30, between lines 7 and 8, to insert the following:
“Report on equality impacts of deferred pensionable age
48. (1) The Minister shall, within 6 months of the passing of this Act, prepare and lay before both Houses of the Oireachtas and the Joint Committee on Social Protection a report on the distributional and equality impacts of the deferred pensionable age, in particular an analysis of how such a measure will impact different types of workers of different income levels.
(2) A report under subsection (1) shall include analysis of alternative proposals for pension reform which would benefit manual, service, gig workers, and all other types of low income worker, including options for a universal pension.”.
Amendment No. 16 seeks a report on the equality impacts of deferred pensionable age. It seeks an analysis of how this policy would benefit different types of workers and different income levels and whether it would benefit higher-income workers more than low-income workers. The amendment also seeks revised proposals for pension reform which would benefit low-income and manual workers.
It is a huge concern that this new policy of optional deferral will function, in reality, for most people as a pension cut by the back door. It is alarming to imagine a future scenario in which a deferred higher rate of pension is used as a justification for failing to increase the baseline rate of State pension adequately as the years go on. It is easy to imagine working-class people in physically demanding jobs who want and need to retire at 65 being shamed in a way or simply told that if they want the higher pension, they can work for longer. No one should have to make such a decision after decades of hard labour.
Let us look at the profile of people now coming to the age of 65. All my aunts and uncles are now aged between their late 50s and 65 and they think of the deferred pension. They have been working not just since they were 18 and left school. There are people in that age bracket who have been working since they were ten or 11, so they have often already worked 15, 16 or 17 years longer than people in any other age bracket. Early school leaving was prevalent among the generation of people approaching 65. My mam and her ten siblings are all approaching that age. Over the next few years, therefore, the generation of early school leavers, among whom there was not a high rate of people making it through secondary school, will be impacted not only in the sense that they could end up on a lower rate of pension, having to work longer to get to the higher rate, but also in the sense that they have already worked sometimes a hell of a lot more years than most of us have.
The reality is that this policy of an optional pension deferral is for a very specific type of worker. Very few people who have put in such a lifetime of work in a physically demanding, low-income job will have the ability or desire to defer their pension. If they do, that is an option for them, obviously, and if they feel they have the capacity, that is fine, but for many people such as those the Minister mentioned - bricklayers, people working on sites, people working with their hands and people working on their feet all day - I feel, and many of us feel, that it is morally unacceptable to associate a higher rate of pension with a deferral because it essentially amounts to a cut for the working class, who may not be in a position to work those optional years. Those who work in services, behind desks and so on, largely enjoying relatively higher incomes throughout their lives, will be offered a higher rate of pension at the end of it all, despite the fact that they will need it far less than their lower-income counterparts who cannot work for longer, and despite the fact that they are far more likely to have private pensions of their own.
This is a wrong direction for pension reform. I note that Senator Higgins also has repeatedly highlighted in recent years that the cost of a universal pension would be in the region of €3 billion per year. We are already spending €3 billion on private pension tax relief alone, a benefit which we know accrues mainly to high-income earners. Some 70% of that relief accrues to the top 20% of earners, so a reform is crying out to be made, given the constant rhetoric we hear about the unaffordability of pensions and given our ageing population. If we are so concerned with making pensions affordable, why do we not start there? I have already highlighted, in respect of a previous amendment, that other countries in Europe with much older populations and much less thriving economies have not had to resort to increasing the pension age, as Ireland's Government has done.
I urge the Government to pursue pension reforms which benefit all workers equally and to keep in mind that for some people it will not be an option to defer their pension due to the type of work they have engaged in. They may also not meet the criteria for disability and may have to jump through several different hoops to then be determined as disabled at a certain point when, really, it is just a lifetime of hard labour that has got them to 65 and now being ready to retire after it. Some people may end up with a disability whereby they can shift onto payment before any sort of deferred pension. However, as regards those workers who do not fall into that bracket and potentially do not want to be categorised as disabled, their bodies are tired from the type of work they have done and the length of time they have had to do it. We feel, therefore, that this is a retrograde step and we have many concerns about the optional deferred pension age.
How will this work on the ground? I will outline a couple of scenarios. The first relates to people who may wish to retire at the age of 66 and draw a pension and maybe work two or three days a week. Will such people pay PRSI on their earnings afterwards? Is there no PRSI on it? Can they opt to pay PRSI on earnings and then get a higher pension when they stop work completely? On the other hand, there is a difference the rates at ages 66, 67 and 68 or whatever. If it is €20 per week, let us say, for each bracket. As time goes on, the gap will get bigger because there will be index-linked pensions in future. Even if a pension is not index-linked, it will be on a pro rata basis. The difference in the rate for a person of 66 and the rate for another person might go to €22 the following year. Alternatively, will the gap stay the same every year to eternity or until a new pension proposal is brought in? I hope the Minister gets the point I am trying to make. In the context of people who are not drawing the full State pension, the gap is getting wider every year. The gap between pensioners entitled to the full State pension of €267 or whatever it is per week and those who are on maybe 90% and are drawing maybe €230 per week is widening every year. How will this new pension proposal work on the ground in the context of those two issues?
I thank the Senators for their comments. I do not propose to accept the amendment. As I said in respect of similar amendments requesting reports, legislation is not the appropriate vehicle for seeking reports. I understand why the Senator tabled the amendments, however.
As they will be aware, pension deferral will only be introduced for those who reach age 66 on or after 1 January 2024 and it is entirely voluntary. We are giving greater flexibility in order that people have more choice. They know best what suits them. This is completely voluntary. People reaching the age of 67 will not receive a deferred pension rate until 1 January 2025. A table is provided that shows how much extra a person who is 66 in January and works an extra year will get. The baseline is the State pension, which is paid at age 66. For every year longer a person works, there is an actuarial review done. The base rate for those aged 66 will go up again in January, by €12, and there is an increase for each year a person works longer. The longer you work, the more you get. Some people might want the higher pension, but many other people want to make up their contributions in order that they can get a full pension when they retire. As we know, many people might be four years short of the full State pension. If people are a year or two short, they can work those extra years to make sure they get a full pension. It is completely voluntary.
In considering the gender and equality impacts of the introduction of flexible access to the State pension system, the Pensions Commission noted that international experience was that the take-up of deferral in OECD countries tended to be very low. Potential impacts may be on the pooling of finances in households where the primary claimant defers. However, the commission noted the impacts were likely to be minimal.
In light of the fact that deferral only begins from January 2024 and it is an entirely voluntary system, any consideration of the distributional and equality impacts of the deferred pensionable age would be premature. Such analysis will be better informed following a period of at least ten years to consider how deferral operates in practice.
As regards subsection (2) of the proposed amendment, the Pensions Commission concluded its detailed analysis of the State pension system in late 2020. This included consideration of a wide range of reforms of the State pension system, including workers in hazardous or arduous occupations and those with long records, and options for a universal pension. In this regard, I do not accept that a further report on State pension reform is warranted at this time. The commission examined submissions that suggested establishing a universal State pension system. It noted that:
introducing a universal pension system (either immediately or with a transition period) would require either considerable additional revenues, or, if introduced on a cost-neutral basis, very significant diversion of funds from elsewhere. Potential consequences of introduction of such a pension include a large reduction in the current payment rate of the State Pension, substantial increases in the rate of tax deductions (on the basis that PRSI contributions would cease for State Pension benefits), or measures such as reducing tax relief on occupational and private pensions, which would impact on the take-home pay of the workers affected.
That is the view of the Pensions Commission. When announcing the Government’s response to the commission, I secured Government approval to examine a scheme to modify the current benefit payment for 65-year-olds to provide a benefit payment for people who, following a long working life of 40 years or more, are not able to remain working in their early 60s. In the meantime, people under the age of 66 who cannot work for health reasons can apply to avail of the invalidity pension and disability allowance schemes or the benefit payment for 65-year-olds.
On the issue raised by Senator Burke, those who draw down a State pension and continue to work will not have to pay PRSI. He asked about the different rates for each year. I have published them. They will be reviewed every five years in line with an actuarial review.
I understand the voluntary nature of the proposal and that every scenario cannot be legislated for but I am thinking of households comprising a widow or a man on his own, where the only payment coming in is that person's pension and there is no pooling. In that scenario, the man may not have had the type of job where he could pay into a pension. He may have worked a very working-class job for his entire life and may wish to retire at the age of 66, but is told he can get a higher rate of pension voluntarily if he works longer. He would not have a desire to do so but would do it of necessity because the income of his home may depend on him and, whether the scheme is voluntary or not, he may feel that he needs to work longer in order to increase that income. If I stay in politics or go into academia or whatever, it might be much easier for me to decide to defer my pension age when I am 66 and work until I am 68. It would not take a physical or emotional toll on me to do that but even though it is voluntary, many people will feel like they have to defer their pension age even through they do not want to do so. They may not feel physically or psychologically able to keep working but they will do so because they know that if they defer, they will get a higher rate which they believe their household needs. It is not based on their ability to keep working, however. Even though this is voluntary in nature, coercion comes into it in many ways. People have to make decisions for their family. To take those people into account, it is necessary to have a real insight into the class or equality impacts and the nature of some types of work. I understand that disability allowance and invalidity pension are available but some people who simply cannot physically or psychologically work past the age of 66 might not want or need to be categorised in that way. I have watched men go out to work whose hands would crack in half if you tried to move them. They may have been working with cement all day or doing another job. When my father retired, there was not enough income in the house. I watched him go out in the early stages of Parkinson's disease to do a security job across the road at night.
When people's household incomes are at such a low rate and there is an option for a higher rate, whether they feel like they can do it or not, they are going to maybe do it. There is something about being able to capture and protect those workers in a way that they do not feel pressured to work past what they feel they are physically and psychologically able to do just so they can access a higher rate of pay, whereas if people work in a job that takes less of a toll, it will be much easier for them to make that decision. People who have a higher level of education or have maybe a more professionalised background will find it much easier to access the higher rate than people who have been working highly laborious jobs their entire lives. It is something we should be assessing and thinking of when it comes to that deferred rate. There needs to be some sort of other category that captures the type of work or manual labour people have been doing in order that they do not end up on a lower rate or end up working longer just to get the higher rate because needs must.
The age of 66 remains the core rate and it is the bedrock of our pension system. International experience is that very few people actually defer but we wanted to give them the flexibility as to whether they want to make those choices. The deferred pension is not a higher pension. It is an actuarial adjustment because people are obviously not drawing down their pension and they are working that bit longer to increase their contributions. They are paying more contributions into the system. I am happy that what we are doing here is the right thing to give people the choice if they want to work on. We have look at this and the Pensions Commission looked at it in detail as well. I am satisfied that this is the way forward. Of course, like anything else, it can be reviewed down the road. That will be up to these Houses to decide. It can be changed, but this the best offering we can put forward at this time.
Amendment put:
The Committee divided: Tá, 5; Níl, 19.
Tá
- Flynn, Eileen.
- Ruane, Lynn.
- Sherlock, Marie.
- Wall, Mark.
- Warfield, Fintan.
Níl
- Ardagh, Catherine.
- Blaney, Niall.
- Burke, Paddy.
- Casey, Pat.
- Cassells, Shane.
- Chambers, Lisa.
- Conway, Martin.
- Crowe, Ollie.
- Cummins, John.
- Daly, Paul.
- Doherty, Regina.
- Dolan, Aisling.
- Dooley, Timmy.
- Fitzpatrick, Mary.
- Garvey, Róisín.
- Lombard, Tim.
- O'Reilly, Pauline.
- Seery Kearney, Mary.
- Ward, Barry.
Tellers: Tá, Senators Lynn Ruane and Eileen Flynn; Níl, Senators Paul Daly and Regina Doherty.
Pursuant to Standing Order 57A, Senator Alice-Mary Higgins has notified the Cathaoirleach that she is on maternity leave from 19th June to 19th December, 2023, and the Whip of the Fianna Fáil Group has notified the Cathaoirleach that the Fianna Fáil Group has entered into a voting pairing arrangement with Senator Higgins for the duration of her maternity leave.
Amendment declared lost.
Sections 48 to 53, inclusive, agreed to.
Amendment No. 17 in the name of Senator Craughwell has been ruled out of order as a potential charge on Revenue.
Amendment No. 17 not moved.
Schedule 1 agreed to.
SCHEDULE 2
Question proposed: "That Schedule 2 be a Schedule to the Bill."
I wish to raise an issue with the Minster. It is not entirely in her Department but the job seeker part of it is and is under this schedule. The Minister for public expenditure comes into it as well, but it relates to members of An Garda Síochána who joined the force after 1995. They do not retire on the same pension as gardaí who joined prior to 1995. They can make up the difference but they have to go on jobseeker's payments for nine months after they retire. Is it fair to ask this? The people who joined after 1995 have a different pension to those who joined before that. There are a couple of reasons why it does not sit will with An Garda Síochána, and I suppose if we were in the same position ourselves, it would not sit well with us either. Those who joined after 1995 must go on jobseeker's payments for nine months after they retire to make up the difference to bring them up to the same level as the Garda pension for pre-1995 entrants. They are only allowed two weeks' holidays so they have to explain to the Minister’s Department why they are on jobseeker's payments and they have to be available for work. Then, if they work, there are deductions afterwards to the pension that they get. It is not very fair, in my view. I ask the Minister that she and the Minister for public expenditure and reform go back to the Government and look at the Garda pension set-up because of the big difference between those members who joined prior to or after 1995. Then there is a different scenario again with those who joined after 2013. There is the one pension Act. Gardaí are not happy about this. It is not very fair that they have to go on jobseeker's payments after they retire to make up the difference to bring them up to where they would have been had they joined before 1995. There is a huge difference there and I ask the Government to look at that.
I met one of the Garda representative associations on the matter. It specifically relates to the Department of public expenditure and reform. Apparently it was some agreement that was entered into some time ago. I may be corrected on that but it was not with my Department. It is a matter for that Department. I am happy to raise it again with the Minister for Public Expenditure, NDP Delivery and Reform.
I thank the Minister.
Question put and agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
When is it proposed to take the next Stage?
Now.
Is that agreed? Agreed.
Question proposed, "That the Bill do now pass."
This is very generous legislation which makes very generous contributions to people. I congratulate the Minister on it and wish her will with it.
I thank the Minister for being back with us in the House for this very important Bill. We know she has had a difficult couple of weeks. We offer our best wishes and deepest sympathies.
I thank the Senators for their co-operation. I wish them all well as we head into the Christmas season. It means the Bill will now go to the President and everyone will get an increase on 1 January.
Question put and agreed to.