Dáil Éireann Debate, Tuesday - 17 November 2015
156. Deputy Aengus Ó Snodaigh asked the Tánaiste and Minister for Social Protection the estimated cost of reversing the increase in the age of qualification for the State pension to 66 years of age. [40455/15]
Amharc ar fhreagra157. Deputy Aengus Ó Snodaigh asked the Tánaiste and Minister for Social Protection the estimated cost of reversing the discontinuation of the State pension (transition) for new claimants. [40456/15]
Amharc ar fhreagra158. Deputy Aengus Ó Snodaigh asked the Tánaiste and Minister for Social Protection the estimated cost of reversing the number of paid contributions required to qualify for the State pension from 260 to 520. [40457/15]
Amharc ar fhreagra159. Deputy Aengus Ó Snodaigh asked the Tánaiste and Minister for Social Protection the estimated cost of reversing the new payment rate bands for State pension. [40458/15]
Amharc ar fhreagra160. Deputy Aengus Ó Snodaigh asked the Tánaiste and Minister for Social Protection the estimated cost in 2021 and in a full-year of not raising the pension age from 66 to 67 years of age. [40459/15]
Amharc ar fhreagra161. Deputy Aengus Ó Snodaigh asked the Tánaiste and Minister for Social Protection the estimated savings targeted by Government when it introduced the measure to raise the age of eligibility for the State pension from 66 to 67 years of age in 2021 and in each full year thereafter. [40460/15]
Amharc ar fhreagraI propose to take Questions Nos. 156 to 161, inclusive, together.
State pensions account for the single largest block of social welfare expenditure. In 2016, €6.976 billion will be spent on pensions, which represents 35% of the Department’s total current expenditure. While expenditure on pensions is increasing by approximately €1 billion every five years because of demographic pressures, this is being successfully managed within the overall welfare budget.
A number of significant reforms to State pensions have recently been introduced and more are planned:
1. In order to provide for sustainable pensions and to facilitate a longer working life, the Government decided to increase State pension age in three separate stages. In 2014, the State pension age was standardised at 66. This will be increased to 67 in 2021 and 68 in 2028. This process saw the abolition of the State Pension Transition payment from 2014.
Savings: At the time this measure was introduced, the exchequer savings arising were estimated to be in the region of just over €30m in 2014 with a full year savings in 2015 of approximately just over €60m.
2. With effect from April 2012, the number of paid contributions required to qualify for a State Pension increased from 260 paid contributions to 520 paid contributions.
Savings: At the time this measure was introduced, the exchequer annual savings were expected to be in the region of €6m per annum in the short term, with this figure expected to rise to €71m in the long term.
3. From September 2012, new rate bands for State Pension were introduced. These additional payment rate bands more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life benefit more in retirement than those with lesser contributions.
Savings: At the time this measure was introduced, the exchequer savings arising were estimated to be in the region of €2.8 million in 2013, €5m in 2014 and €8m in 2015.
Spending estimates for 2021, with or without these reforms, would not be available to my Department, nor will be for some years, and the net savings they will generate in that year will depend on a number of factors, including the rate of pension which will apply at that point, the rate of working age payments for those without work, and the employment rate for older workers at the stage. It is not, therefore, possible to provide the estimates the Deputy requests regarding 2021 and subsequent years without being highly speculative.
It would be hoped, however, that savings similar in magnitude to those realised by raising the State pension by one year in 2014 will also be achieved by a similar increase in 2021, relative to the overall pensions budget that will be in place at that time. While the duration of the average pension will still increase due to increased life expectancy, it is hoped that this reform will keep the associated increase in spending at a manageable level.
