Dáil Éireann Debate, Tuesday - 25 September 2018
496. Deputy Clare Daly asked the Minister for Employment Affairs and Social Protection if she will re-run the public consultation process with regard to pension reform in view of the perceived serious inadequacies of the current consultation process. [38705/18]
Amharc ar fhreagra497. Deputy Clare Daly asked the Minister for Employment Affairs and Social Protection if her attention has been drawn to the fact that the online briefing document Total Contributions Approach Consultation 2018 contains significant and serious errors which give a distorted impression of the changes brought about by the TCA 2012 system (details supplied). [38706/18]
Amharc ar fhreagraI propose to take Questions Nos. 496 and 497 together.
A policy to introduce the Total Contributions Approach (TCA) to the State Pension contributory (SPC) calculation was adopted by Government in the National Pensions Framework in 2010, as was the decision to base the entitlements of all new pensioners on this approach from 2020.
The Roadmap for Pensions Reform 2018-2023 confirmed the Government’s position to reform the State pension in line with the Total Contributions Approach.
A public consultation on the introduction of the Total Contributions Approach to be designed for the periods from 2020 was launched on May 28th. This is distinct from the TCA2012 model announced in January this year which will be available for those affected by the 2012 rate-band changes.
My Department invited interest groups representing pensioners, workers, employers, young people, the unemployed and several other areas to the launch event at which we provided a range of informative presentations and hosted a series of workshops on the various aspects of the proposed reform. Members of the media were also invited and the launch was featured extensively throughout the broadcast and written media in the days that followed. The online consultation lasted for over 3 months and we received nearly 300 responses from individuals and organisations.
The consultation questionnaire was accompanied by a document setting out the context of the consultation. In Appendix 1 of this document there is a table setting out the illustrative entitlements under different state contributory pension approaches - the yearly average approach, the National Pensions Framework approach and the TCA2012 approach. It did not include a model for TCA2020 as that model has not yet been decided.
The Deputy is correct in stating that two of the figures given under the TCA2012 approach in the hypothetical cases are incorrect. I am advised that this inaccuracy was a result of an error in a formula that was used to calculate the outcomes. I apologise for this. I understand that this matter came to light very shortly before the public consultation closed, when a member of the public who had spotted it called an official in my Department.
I do not believe that this has resulted in those who answered the consultation being misled about the provision for credits in the TCA2012 model. In the main body of the document, the chapter “Models of TCA” highlights the primary policy levers within a TCA framework, and the second one listed said “The amount of ordinary credited contributions that could be used (10 years in NPF and TCA2012)". People reading the document would therefore be aware that this limit would apply, and how it would impact upon entitlements. The table in the appendix was added for illustrative purposes only. It was also made clear that the TCA2012 model was not being proposed for TCA2020, and it warned that amounts in the table may depend upon a number of factors.
I do not propose to delay either the introduction of the TCA2012 model, or the progress towards TCA2020, on the grounds set out by the Deputy. Both of these reforms will be introduced via legislation, and the policy choices about the balance between paid contributions, credited contributions and periods caring in the home in calculating entitlements will, I believe be broadly debated by members of the Oireachtas. An amended copy of the table, with outcomes under the final TCA2020 model will be made available in due course, and I can assure the Deputy that there will be no error in that version.
Regarding the contributory pension outcomes under TCA2012, it is true that a person who has spent most of their working age life in receipt of Jobseekers payments, and only 15 years paying into the Social Insurance Fund (as in these hypothetical examples cited by the Deputy), would have a significantly lower contributory pension entitlement than someone who had paid into the Social Insurance Fund for 40 or more years. In most countries, that is how contributory pensions work. However, in most cases, a person in Ireland who received jobseekers payments for most of their adult lives would be entitled, upon reaching State pension age, to a State pension (non-contributory), at 95% the maximum rate of a contributory pension. Consequently the amounts cited by the Deputy as being lost by these pensioners would not arise, except in a very small minority of cases, where a person paid very little into the Social Insurance system, was unemployed for most of his/her life, had no homecaring periods, and yet retired with very significant additional means which made them better off than most pensioners. I think most people would agree that this is very uncommon, and there is not a strong case for such pensioners to be cross-subsidised by others, most of whom have less means, and who have contributed more into the Social Insurance Fund over the years.
The TCA2020 consultation process is now complete, and officials in my Department are analysing the inputs made by those who participated. A summary of these will be published on my Department's website in due course when this work is complete. I am told that a number of submissions stressed the importance of credited contributions, among other matters (notably the total number of contributions required, and the possibility of transitional measures for those who reach pension age soon after 2020), and I will consider the points made in the context of finalising the design for Government's consideration.
Following this, a review of the consultation process itself will be carried out which will consider whether the objectives of the consultation have been met, including whether the methods used were appropriate to the objectives and the cost-effectiveness of the consultation process. It will also identify any lessons learned to inform future consultation processes.
I hope this clarifies the matter for the Deputy.
