John Brady
Ceist:429. Deputy John Brady asked the Minister for Social Protection the estimated cost of restoring the State pension transition over two years. [33413/17]
Amharc ar fhreagraWednesday, 12 July 2017
Ceisteanna (429, 430)
John Brady
Ceist:430. Deputy John Brady asked the Minister for Social Protection the estimated cost of restoring the State pension transition over three years. [33414/17]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 429 and 430 together.
The Social Welfare and Pensions Act 2011 provided that State pension age will be increased gradually to 68 years. This began in January 2014 with the abolition of the State pension (transition), which had been available from 65 for those who satisfied the qualifying conditions, thereby standardising State pension age for all at 66 years. This is the current State pension age. It will increase to 67 in 2021 and to 68 in 2028.
Reversing the abolition of State pension (transition) would have a significant Exchequer cost. In 2013, the cost of the State pension (transition) was €137 million. Its abolition was not expected to save that amount of expenditure in full, as some people who were affected would alternatively claim working age payments such as Jobseeker's Benefit (albeit at a lower rate than the rate of the State pension), or may claim an Increase for a Qualified Adult in respect of their spouse’s pension. However, it is estimated that well over half of the gross cost has been saved each year as a result of this measure, and this would be expected to increase as (a) the number of 65 year olds increases, (b) the change results in a higher percentage of people working while aged 65, and (c) there have been two Budget increases in the rate of the State pension since then. It is estimated that the net saving in 2018 is likely to be in the region of €84 million, and this is expected to rise to €87 million by 2020. These figures do not include future rate increases.
The cost of reversing this decision would depend on the effective date of such a measure and also on any resultant changes in behaviour. If it were to be introduced over a phased basis, it would depend upon how this was effected, but it might be expected that if there was some means used to achieve this over 2 years, the cost might be 50% of the annual cost in year one and 100% in year two, whereas if it was phased in over 3 years, the cost might be 33.3% of the annual cost in year one, 66.7% in year two, and 100% in year three. More detailed proposals would be required to examine the likely cost of such a proposal in greater detail.
I hope this clarifies the matter for the Deputy.