Dáil Éireann Debate, Thursday - 8 March 2018
608. Deputy John Brady asked the Minister for Employment Affairs and Social Protection the areas that will be examined for possible changes to or restructuring of PRSI contributions with a view to manage and finance State pensions into the future as per the newly published Roadmap for Pensions Reform; and if she will make a statement on the matter. [11671/18]
Amharc ar fhreagraThe Roadmap for Pensions Reform 2018-2023 confirms Government’s position that the State pension will be reformed and will remain as the fundamental basis of the pension system in Ireland. To do this, the Government will introduce from 2020 ‘Total Contributions Approach’ (TCA) for the State Pension (Contributory). The TCA is advanced as a more logical and transparent system, where the individual’s lifetime contribution will more closely match the benefit received.
The Roadmap also confirms that State pension payments will be formally benchmarked at 34% of average earnings and that future increases will be linked to the consumer price index and average wages. Taken together, these measures will provide greater confidence regarding pension value over the long term. The changes proposed in this Roadmap will enable people to plan with confidence for their retirement and be assured that the adequacy of their State pension will be protected over time. They will also introduce greater equity into the State pension system.
However the changes can only be implemented and the necessary assurances as to the maintenance of pension adequacy provided, if there is a similar level of assurance as to the funding of the system. In other words, that social insurance contribution rates will be adjusted to ensure that there are sufficient funds available to Government to finance the payment of pensions.
Therefore, in order to bring greater certainty to the funding of the Social Insurance Fund, the Roadmap proposes the establishment of a transparent actuarial basis for the setting of Social Insurance contribution rates and commits to the publication of a consultation paper in this regard. This process will be informed by the recently published Actuarial Review of the Social Insurance Fund which will itself play an important role in informing overall debate on policy developments in relation to the SIF in the years ahead. This includes the financial sustainability of the Fund given the expected demographic challenges and consideration of extending the scope of benefits for workers generally, including the self-employed. This will provide Government with a timely and evidence-led opportunity to undertake a full review of our social insurance system and to consult with stakeholders.
I trust this clarifies the matter for the Deputy.
