State Pension (Contributory)

Dáil Éireann Debate, Wednesday - 29 November 2017

Wednesday, 29 November 2017

Ceisteanna (40, 44, 45, 48)

Ruth Coppinger

Ceist:

40. Deputy Ruth Coppinger asked the Minister for Employment Affairs and Social Protection her plans to implement changes to the State pension in order to rectify pension inequality faced by women. [50591/17]

Robert Troy

Ceist:

44. Deputy Robert Troy asked the Minister for Employment Affairs and Social Protection the timeframe for addressing the inequitable system of contribution averaging; and if she will make a statement on the matter. [50593/17]

Niamh Smyth

Ceist:

45. Deputy Niamh Smyth asked the Minister for Employment Affairs and Social Protection her plans to re-examine the situation whereby women who were in the workforce and left in earlier years for family duties are not in a position to receive the full State contributory pension when they reach retirement age; and her further plans to address this situation. [50545/17]

Martin Heydon

Ceist:

48. Deputy Martin Heydon asked the Minister for Employment Affairs and Social Protection the status of work of her Department in reviewing the position of those affected by the 2012 changes to the eligibility bands for the contributory old age pension; when she expects her report to be finalised. [50578/17]

Freagraí scríofa

Minister for Employment Affairs and Social Protection

I propose to take Questions Nos. 40, 44, 45 and 48 together.

The current rate bands applying to the State pension contributory were introduced from September 2012, replacing previous rates introduced in 2000. The rate bands prior to 2000 were less generous, and the improved rate bands introduced in 2000 were a feature of the economic and political environment at that time. The economic crash changed the focus and while other payments were reduced as a result, the core rates of the pension, which many pensioners were solely dependent on, were maintained. Instead, the rates for people who had additional means and lesser PRSI contribution records were reduced.

The 2012 rate bands more closely reflect the social insurance contributions history of a person than those in place between 2000 and 2012. The current rate bands still provide pensions to people which are not proportionate with their level of contribution. A person with only 20 years of contributions over nearly 50 years will still get an 85% pension.

It is estimated that, to revert to the previous bands from January 2018, this would result in an annual cost of well over €70 million in 2018, and this annual cost would increase by an estimated €10 to €12 million each following year.

My Department is examining in depth various options that would provide some relief to those who would have a higher contributory pension had the rate bands not been amended in 2012. If there are equitable changes that target such relief to those who were particularly affected by anomalies under the yearly average system, particularly those with homemaking periods prior to the introduction of the Homemakers scheme, I will bring these options to the relevant Cabinet Committee before bringing any final proposals to Cabinet.

Any change would, if of any substance, have a significant cost, and the resources would have to come from somewhere. It is unlikely this could be done before Budget 2019, and this would reduce the funds available to increase rates of payment in that Budget for everyone, including widows and non-contributory pensioners, neither of whom would gain from any such measure.

It is intended to introduce a total contributions approach for new pensioners from 2020. This will make the rate of contributory pension more closely match contributions made by a person. It will also have significant homemakers provisions that will assist those pensioners who spent significant periods caring for their children, or adults with a caring need.

The main aim of Government policy on pensions is to make sure that pensions are affordable, sustainable and keep their value in the coming years. The reforms that are planned will result in a more inclusive and fairer pension system for all citizens.

I hope this clarifies the matter for the Deputies.

Questions Nos. 41 to 43, inclusive, answered orally.

Questions No. 44 and 45 answered with Question No. 40.