The Commission on Taxation and Welfare was established in April 2021, with the aim of setting out how our taxation and welfare system might best support economic activity and income redistribution whilst promoting employment and prosperity in a resilient, inclusive, and sustainable manner. It published its report in September 2022.
I am pleased the Committee on Budgetary Oversight published a report in September 2023 on its hearings relating to the report of the Commission on Taxation and Welfare.
Among its overall comments and observations, the Committee made a number of specific recommendations relating to my Department. My officials have carefully considered the report as it relates to my Department.
As regards recommendations 16 and 17, the Government has agreed to retain the State Pension age at 66 years. However, to facilitate the introduction of State Pension deferral, the PRSI exemption age has increased from age 66 to 70 years with the exception of the following two categories:
1. Those already aged 66 years or over on the 1st January 2024.
2. Those who have drawn down their entitlement to the State Pension (Contributory).
For those meeting the above exceptions, they will continue to be exempt from PRSI from age 66 years while those who do not, will be able to continue to pay PRSI in order to gain entitlement to the State Pension (Contributory) or defer their entitlement to enhance their benefit once they do so.
On benchmarking and indexation, in September 2023 I announced a series of reforms to the State Pension system in response to the recommendations from the Commission on Pensions. As part of this, the Government committed that a smoothed earnings method to calculating a benchmarked/indexed rate of State Pension payments will be introduced as an input to the annual budget process and be submitted to Government each year from 2023. A study on benchmarking and indexation in relation to working age social protection payments is underway and is expected to be completed in 2024.
In respect of Automatic Enrolment, the Automatic Enrolment Retirement Savings System Bill is being implemented to address the shortfall in pension coverage and retirement income adequacy. It is estimated that up to two thirds of workers in the private sector do not have pension coverage outside of the State Pension.
It is important therefore that action is taken to make sure that people will have sufficient income in retirement to provide them with a good standard of living.
I trust this clarifies the matter for the Deputy.