Dáil Éireann Debate, Wednesday - 17 January 2018
2. Deputy John Brady asked the Minister for Employment Affairs and Social Protection the timeframe for the restoration of the State pension for those affected by the 2012 changes; and if she will make a statement on the matter. [2331/18]
Amharc ar fhreagra3. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection her plans to correct the 2012 pension anomalies; and if she will make a statement on the matter. [2190/18]
Amharc ar fhreagraI start by expressing a happy new year to everyone in the House, to the Minister, to the staff and to the Leas-Cheann Comhairle.
Will the Minister outline clearly a timeframe for the reversal of the 2012 pension changes and a timeframe for the restoration of pension payments to the more than 42,000 people who are directly affected by these changes?
I propose to take Questions Nos. 2 and 3 together.
The current rate bands applying to the State contributory pension 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 environment, which we all acknowledge, at that time. Although the economic crash in 2008 led to a reduction in other welfare payments, the core rates of the pension, which many pensioners were solely dependent on, were maintained. In order to respond to the pressures on the State finances, however, it was necessary to achieve some savings in the pension arena. In order to do this in a manner that both minimised the impact on the most vulnerable pensioners and was consistent with long-term pension policy it was decided to align pension payments for new pensioners after 2012 more closely with the number of social insurance contributions made by a person. This was achieved by introducing new rate bands for the purpose of calculating average contributions, which is the current system.
The rate bands introduced in 2012 more closely reflect the social insurance contributions history of a person than those in place between the years 2000 and 2012. Although for some people these bands have reduced their pension compared to what they would have received under the old rules, the pension that is paid is still disproportionate to the level of contributions that have been made. For example, a person with only 20 years of contributions over nearly 50 years of his or her working life still receives an 85% pension payment. Although the basis of averaging pensions is still relatively generous I recognise - I have said this before - that some people, mainly but not exclusively women, who have broken contribution histories are receiving a pension that is significantly lower than they would otherwise have received; a pension that is less, in some cases, than is paid to people with a similar level of contributions paid over an unbroken period. I therefore have committed to examine options that will address this issue.
It is estimated that to revert to the previous bands from January 2018 would result in a cost increase of well over €70 million in 2018, and this annual cost would increase by an estimated €10 million to €12 million each following year. Officials in my Department have completed a report on this matter, which I intend to bring to a Cabinet committee tomorrow.
I have listened to the Minister's response and heard her trying to explain the rationale around why these changes were put in place but there is simply no rationale. The changes were wrong in 2012 and they are wrong now. They need to be changed. The Minister and her Government have an opportunity this week to rectify the changes that directly impacted more than 42,000 pensioners, predominantly women, who took time out from their working lives to look after family members or loved ones. The Minister has an opportunity to bring a proposal to the Cabinet sub-committee tomorrow or to the full Cabinet in order to right the wrong that was done to these pensioners. Perhaps, in this era of the so-called new politics, the Minister might give the Dáil a brief insight into what proposal will be brought to the Cabinet sub-committee tomorrow. It would be useful. The Minister has said previously that she would have no problem publishing the proposals. Perhaps she will now give us some insight into what she and the Department are thinking in the context of reversing the changes and restoring the payments to the 42,000 people who are directly impacted.
To be clear, I do not believe that at any stage I have ever said the changes were wrong, and if I have then I would like to correct it if the Deputy's understanding of what I said is not true. There is nothing wrong with the band changes and the averaging system that was introduced by this House in 2012, in the Government's opinion. The change gave rise to an anomaly that currently affects some 42,000 people. This is what I shall address. At no stage, however, have I ever said that the introduction of the bands, or the averaging system that arose from those band changes to the calculations of pensions, was wrong. There is a difficulty with the fact that men and women who had longer working lives than other people are receiving lesser payments, even though they might have had similar contribution histories. That is wrong, it is an anomaly and is what we are going to fix. I am not at liberty to share the details of the proposals, as they must go to the Cabinet. I will bring the proposals to the Cabinet sub-committee tomorrow, and if I can get approval tomorrow it will go to the full Cabinet committee on Tuesday. As I have agreed with Deputies Brady and O'Dea before Christmas, I will publish that report on Tuesday regardless of the outcome and whether I get what I am looking for. I reiterate that there is a Cabinet sub-committee meeting concerning the economics portfolio tomorrow afternoon and I will propose a solution on the pensions changes to the committee tomorrow. If they give me the nod - for want of a better word - then I will bring the proposal to the full Cabinet meeting on Tuesday and we will have a conversation thereafter on that.
I thank the Minister for the clarification. The report is going to the Cabinet sub-committee tomorrow, which will discuss the proposed solution and it will then go to the Cabinet on Tuesday. The Minister has said she will publish the report regardless of the outcome. Is the Minister saying that even if the Cabinet turns down the proposals, she will still publish the proposals after that meeting? What happens if the Cabinet sub-committee says no and thinks the proposals are unrealistic? What is the situation in that case?
The Minister, Deputy Doherty, made reference to a figure of €70 million to rectify the anomaly this year. Am I correct in saying that it would cost €70 million or thereabouts if we were to rectify the anomaly straightaway and if it was backdated to 1 January? It depends on where the change comes in through the year.
I will answer the Deputy's question directly. Before Christmas I committed to him that when I bring the report to the cabinet I will publish it. That position has not changed. I very much hope that I get a positive response. I am fairly confident that I will. I believe that the options in the proposals are very reasonable and genuinely reflect an acknowledgement on my part, as I have already said, that some people have had a disservice done to them arising from the length of time they contributed to the State. That is simply not fair. I am very hopeful, obviously, that the proposal I am putting forward will be received positively. Whether it is or not, however, I made a commitment to the Deputies before Christmas that I will publish the report and I will do this on Tuesday afternoon.
I do not want to get into an argument with the Minister on this issue. The Minister seems to think it was an anomaly that arose from the 2012 changes. I argue against that; it was a clearly designed measure taken in the full knowledge of the impact it would have on our pensioners, especially on women. There is no question about that in my mind, in the view of the many organisations that are actively campaigning to change this, and in the minds of the many people who are directly impacted. The Minister may have alternative views on this aspect but I believe it was a conscious decision taken at the time.
The Minister may be aware of the huge pressure that is being applied. A press conference is taking place as we are here in the Chamber. A protest will take place outside the Dáil tomorrow morning and afternoon. The Minister has an opportunity to make this change. If and when these changes come in, we need clarity as to whether they will be retrospective and backdated to 1 January this year or to 2012. Those are big questions and challenges for the Minister but we need clarity on them. Hopefully, the Minister will get this proposal though the Cabinet sub-committee tomorrow and the full Cabinet next Tuesday. The 42,000 affected need this change. They needed that change yesterday. This issue cannot be allowed to be kicked down the road any further. The change introduced in 2012 represented a huge disservice given that it was introduced in the full knowledge of the impact it would have.
I will take a supplementary question from Deputy O'Dea and then call the Minister to respond.
Deputy Burton, who initiated the changes, told us at the time that it was an equity measure, a measure to bring contributions more into line with payments, but in recent debates she has portrayed it as a cut to protect the Social Insurance Fund. Assuming the Minister gets this proposal through the Cabinet subcommittee tomorrow, and I wish her the best of luck with that, and assuming it goes to and is approved by Cabinet, can we envisage that the changes will come in more or less immediately? In other words, I am trying to ascertain the timeline and I presume there will not be a decision by the Cabinet that we are going to do this, that or the other and that we will have to wait until the next budget for the timeline for these changes. Can the Minister give an assurance that the timeline for the introduction of the changes she proposes, if accepted, will commence before the next budget?
First, I am very glad that Deputy Brady does not want to argue with me because this is only January but we are not disagreeing with each other. He might think that the changes in the whole should not have been brought in but the changes that happened in 2012 did not only affect 42,000 people, they affected hundreds of thousands of people. Except for the 42,000 people who were maligned by the averaging system because of the length of their service, all of the other thousands of people who have been affected by the changes do not have the same view that the Deputy would have. I acknowledge that a disservice was done to those people through the averaging system. That was wrong. It is not fair that somebody would have a length of contribution of service to the country and receive less of a pension than somebody who has a small contribution service history to the country. I acknowledge that today, I acknowledged it months ago and I also acknowledged months ago that I will fix it, and I will fix it. I am sorry the Deputy is dying for information on this, as I know everybody else is, but I am not in a position to give him something that I have not put to both the Cabinet sub-committee and the Cabinet committee next Tuesday until they have seen it. Otherwise, why do we have these committees unless we are going to use the protocols of getting what I need to get through them?
I believe Deputy O'Dea is well aware, as I have said previously, that regardless of whatever is accepted or not accepted, this will involve new money. It is not that there is a pot of money sitting in the Department somewhere that can resolve this. It did not form part of the negotiations of the social welfare budget for this year. The Deputy is well aware of that, as am I. Therefore, I will be seeking new money and that new money does not exist today. I am grateful for the Deputy's good wishes and if he could double and triple them over the next few days-----
We must move on.
-----such that something magically would happen for me, that would be great.
I would be delighted to do that.
The next question is in Deputy Bríd Smith's name.
I believe Deputy O'Dea knows my intention on this. I want to fix this as quickly as I can but let us all be honest with each other in this Chamber that it will involve new money.
