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State Pensions

Dáil Éireann Debate, Thursday - 30 July 2020

Thursday, 30 July 2020

Ceisteanna (816)

Claire Kerrane

Ceist:

816. Deputy Claire Kerrane asked the Minister for Employment Affairs and Social Protection the estimated full-year cost of reintroducing the State pension transition scheme for 65 year olds. [20013/20]

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Freagraí scríofa

The Social Welfare and Pensions Act 2011 provided for the abolition of the State Pension Transition (SPT) in 2014.  This measure standardised the State pension age for all at 66 years. 

When it existed, SPT was a scheme which allowed those who were retired to get a transitionary payment between the ages of 65 and 66 years.  The SPT maximum personal rate was equivalent to the then maximum rate for the State Pension (Contributory).  Eligibility was based on PRSI contributions and credits, and it was not a means tested payment.  It is important to note that the conditions and eligibility requirements for SPT were different to those for the State Pension (Contributory).  For example, a person had to have a minimum average of 24 contributions per annum to be eligible for the previous model of SPT whereas an average of 10 contributions per annum is required for SPC eligibility.  In addition, recipients of the previous model of SPT were not eligible for Free Travel, the Household Benefits Package (electricity, gas, TV licence) or Living Alone Allowance. 

Based on modelling conducted earlier this year, the Department’s best current estimate for the gross cost of reintroducing State Pension Transition (on the same basis as it previously operated) is €293 million for a full year.  It is expected that these costs would be offset somewhat by savings of €166 million on Working Age Schemes (arising from recipients transferring from these schemes to SPT), giving a net cost of €127 million each year.  These figures are based on current payment rates.

This costing was calculated based on analysis of the observed ratio of SPT awards to State Pension (Contributory) awards for the period from 2009 to 2012, and projecting this forward in terms of estimated recipient numbers in coming years.  It should be noted that these  estimates are subject to change in the context of emerging trends and associated revisions of the estimated numbers of recipients. 

There is no statutory retirement age in Ireland.  In relation to the current position for 65 year olds, it is hoped that Irish workers, in most cases, will continue to work up to State pension age.  Where this is not possible, there are specific measures which apply to someone claiming Jobseeker’s Benefit from a date after their 65th birthday.  Social welfare legislation states that jobseekers payments may be made until a person reaches pensionable age.  If a person aged 65 has at least 156 PRSI contribution weeks paid they will continue to receive jobseekers benefit even when benefit exhausts until they reach State pension age. 

Ordinarily, those in receipt of a jobseeker’s payment must engage with the Department’s activation process. These conditions do not apply to people aged 62 and over.  However, they can still avail voluntarily of an array of supports, which are available from my Department if they wish to return to work, training or education.  Special arrangements have also been made so that people in this age group only have to register with their Intreo Centre once a year and so they do not need to "sign on".  Additionally, their payments will be paid directly into their bank accounts if they wish.

The new Programme for Government “Our Shared Future” proposes an “Early Retirement Allowance or Pension” for 65 year olds paid at the same rate as Jobseeker's Benefit without a requirement to sign on, partake in any activation measures or be available for and genuinely seeking work.  The new payment will be introduced as early as possible for those who are retired from employment.  Officials in the Department are currently considering the design of the scheme and assessing the necessary legislation, ICT system requirements and administrative processes required to support the introduction of this payment.     

The public policy and social issues in relation to funding a sustainable and adequate State pension system are complex.  Therefore, the Government will establish a Commission on Pensions to examine a range of issues including contributions, calculation methods, sustainability, eligibility and intergenerational fairness. The Terms of Reference for the Commission on Pensions are currently being developed and options for its membership are being considered. Proposals will be brought to Government in that regard as soon as possible.  The Commission is to report to Government by June 2021 and the Government will take action, having regard to the recommendations of the Commission, within six months. 

I hope this clarifies the matter for the Deputy.

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