Dáil Éireann Debate, Thursday - 26 October 2017
254. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection the expected publication date of the report on pension inequities agreed to by the former Minister for Social Protection during the passing of the Social Welfare Bill 2017; and if she will make a statement on the matter. [45393/17]
Amharc ar fhreagra255. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection the actions she will take if the report on pension inequities agreed to by the former Minister for Social Protection finds that the changes introduced to bands in 2012 had an adverse effect on pensioners and women pensioners in particular; and if she will make a statement on the matter. [45394/17]
Amharc ar fhreagra256. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection her plans to address the anomalies in the calculation of the contributory pension before 2020 in view of the fact that the system is scheduled to move from an averaging approach to a total contributions approach; and if she will make a statement on the matter. [45395/17]
Amharc ar fhreagraI propose to take Questions Nos. 254 to 256, inclusive, together.
The average pension payments made by my Department to men and women over 66 years of age are within 1% of each other approximately, and this results in very similar outcomes for older men and women in avoiding poverty. The most recent CSO figures for Consistent Poverty indicated that 2.6% of women over 65, and 2.9% of men over 65, are in consistent poverty, which is less than a third that of the general population. Eurostat figures also show that men and women over 65 are less likely to be at risk of poverty and social exclusion in Ireland than in the EU as a whole, with the gap in outcomes between men and women being significantly narrower in Ireland than most countries.
I intend to publish a Pensions Reform Plan by the end of this year. The aim of the planned reforms will be to establish a sound and fit for purpose overall pension system for the coming decades, one that is sustainable and which will shape the retirement landscape to the benefit of our retirees for generations to come. One of the main components of that Plan will be the introduction of a Total Contributions Approach for the contributory pension to replace the yearly average approach, for new pensioners from about 2020. The aim of this approach is to make the rate of contributory pension more closely match contributions made by a person. This is a very big change and there are a lot of legal, administrative, and technical elements to put in place before it can be done. Its aim is to provide as fair a basis as possible for the calculation of contributory pensions while removing the anomalies of the existing system. Key to the design of this new approach will be the position of women who have gaps in their contribution records as a result of caring duties.
Officials in my Department are currently examining data from the Actuarial Review of the Social Insurance Fund, which was finalised recently. Following completion of this analysis, it is intended to have a public consultation on this reform, and this will provide an opportunity for people to submit their views on the priorities in this reform. Following this consultation process, proposals on the final details of the scheme will be made to the Government. This, in turn, will result in legislation being prepared for consideration by the Oireachtas.
As regards the specific matter of the post-2012 rate bands, I have asked my Department to prepare a report for me on the issue as soon as possible to see what options are open to improving the outcomes for those whose contributory entitlements are lower as a result of that change. I will be bringing the report to Government as soon as it is ready. However, the Deputy should bear in mind that the cost of simply reverting to the rate bands from 2000-2012 would be very expensive, would generally increase payments to better-off pensioners with additional means, and would reduce resources available to the broader group of pensioners. The recent Budget contained increases to the rate of the payment for pensions would not have been feasible if such a reversal of the 2012 changes had also been included, and that would have impacted negatively upon the most vulnerable pensioners, including those with no additional means, and widows and widowers living alone with only one pension payment.
It should be remembered that, where somebody does not qualify for a full rate contributory pension, they will generally qualify for an alternative payment, unless they have significant additional means. If their spouse has a contributory pension, they may qualify for an increase for a qualified adult amounting to up to 90% of a full rate pension, which is based on their own means and is paid directly to them. Alternatively, they may qualify for a means-tested non-contributory State pension which amounts to up to 95% of the maximum contributory rate, based on a household means test.
Most pensioners would satisfy the means tests for these two payments, and the very large majority of people paid them receive the maximum rate. Therefore, it would seem that those in receipt of SPC payments at a lower rate are among the better off pensioners who have significant additional means, over and above state supports.
I hope this clarifies the matter for the Deputy.
