Dáil Éireann Debate, Tuesday - 18 September 2012
823. Deputy Michael Healy-Rae asked the Minister for Social Protection the position regarding pension entitlements under proposed new rules (details supplied); and if she will make a statement on the matter. [38735/12]
Amharc ar fhreagraThere is an important context to the proposed changes to State pension provision. Given the scale of the fiscal crisis and because spending on social protection accounts for nearly 40% of current Government expenditure, you will appreciate that savings have to be found in the social welfare system.
As social structures in Ireland are changing rapidly, the structures of our social support need to change to accommodate this and the changes to State pension have been made in the context of changing demographics and the fact that people are living longer and healthier lives.
In addition to the budgetary imperative, there is an important long-term policy context for the proposed changes to State pension, which includes gradually increasing the State pension age to 68 years and introducing changes to the pension rate bands for customers who reach pension age on and from September 2012. There are currently six people of working age for every pensioner and this ratio is expected to decrease to approximately two to one by 2050.
Therefore, the task of financing increasing pensions will fall to a diminishing share of the population.
This has obvious and significant implications in relation to the future costs of State pension provision. The period for which an average pension will be paid will be greater than the period for which a pension is paid at present. The standardisation of State pension age to age 66 is one of the measures planned which aims to increase the sustainability of the Irish pension system.
It is important in assessing any rates of payment, that we focus on the real impact of social welfare payments. In this regard, it should be noted that older people do not experience the levels of poverty that existed in the past. This can be clearly seen in a wide range of data such as the significant reduction in the ‘risk of poverty’ rate from 27.1% in 2004 to 9.6% in 2010. The consistent poverty rate over the same period also declined from 3.9% to 0.9%. If one examines deprivation rates from a gender perspective, it can be seen that in 2009, the deprivation rate of older men at 7.6% was lower than the deprivation rate of older women at 11.1%. However, in 2010 this pattern has reversed and the data now shows us that older women suffer lower rates of deprivation at 6.9% compared to 11.8% for older men.
The State pension is a very valuable benefit. Therefore, it is important to ensure that those qualifying have made a sustained contribution to the Social Insurance Fund over their working lives.
Recent changes to State pension supports the direct link between contributions made and the rate of pension received which underpins State pension policy. By aligning the rate of pension paid with the contribution made ensures that those who contribute more during a working life benefit more in retirement than those with lesser contributions. The sustainability of pensions into the future is also important given the changing demographics, the increased numbers of those over 65 and increased longevity and reduced dependency ratio.
In relation to women who leave the workplace for homemaking/caring purposes, they can, if eligible, avail of the homemakers scheme which helps to provide a higher rate of pension for those who meet the qualifying conditions.
It should be noted that women who do not qualify for a pension or are affected by the rate band change may, if their spouse is in receipt of a State pension contributory, receive a qualified adult payment at a higher rate where they satisfy a means test. A State pension non-contributory pension, which is a means tested payment, may also be payable. The Actuarial Review of the Social Insurance Fund shows that those with short contribution histories have the potential to fare better than those with full contribution histories. This is particularly helpful to women. The Fund also provides better value to women than to men.
An information campaign in relation to all of the changes to State pension has been underway since March 2012 and all information can be accessed at www.welfare.ie. My Department met with the relevant representative groups and information leaflets were disseminated to all relevant groups as part of the information campaign.
