Ms Naomi Feely:

On behalf of Age Action, I thank the committee for its invitation. In my opening comments I will focus on the gender gap in State pensions, especially the implications of the changes introduced to the pension system in budget 2012. My colleague and I are perfectly happy to take questions on broader policy issues related to budget 2018.

I am the senior policy officer at Age Action. I am joined by my colleague, Mr. Justin Moran, head of advocacy and communications. I lead the organisation's policy team. Of critical importance to this work is capturing the lived experience of older people in Ireland. For some time we have been contacted by women pensioners who have highlighted injustices in the current pension system. On foot of such contacts, in 2016 we commissioned research on the impact of changes that took effect in 2012 related to the eligibility criteria for receipt of the State contributory pension. One woman said:

I was so shocked, angry and annoyed when I first heard the amount I was to be awarded, it brought back the anger I felt in 1972 when I had to leave my job. I believe I am being penalised for caring for my children.

Another woman said:

I was devastated when I received the letter outlining how much I would receive. I am so angry that they have taken the few contributions I made while a student into the averaging. The system is grossly unjust and it is not there to ensure a just and adequate pension but rather to reduce the State's obligation as far as possible.

These quotes are from women who participated in Age Action's research project, Towards a Fair State Pension for Women Pensioners. They are merely a sample of the many who have contacted us. For many of the current generation of older women, legal restrictions, cultural norms and practices during their working lives meant that they often gave up work on marriage or to look after their children. Their contributions to the pay related social insurance system can, therefore, be broken. When averaged, their reduced number of contributions means that they are awarded a lower weekly rate of State pension than they would have expected. A gender breakdown of State pension recipients is illustrative of this, as women are more likely to be claiming a non-contributory rather than a contributory pension payment. For example, in 2015 a total of 62% of recipients of the State non-contributory means-tested pension were women. The trends are reversed in the case of the State contributory pension, with 64% of recipients being men. A typographical error was included in the submission to the committee on this point.

Overall, however, the breakdown is 50:50, in other words, pension recipients are divided equally between men and women. However, we see these disaggregated gender issues when we look at the contributory and non-contributory system.

A further gender disaggregation across the contributory payment bands indicates that only one third of all female recipients of this payment receive the top weekly rate versus two thirds of all male recipients. The overall gendered nature of accessing contributory and non-contributory pension payments was also evident in 2011. This is not, therefore, a recent phenomenon. From 2012 onwards, changes in the eligibility criteria of the contributory State pension made it increasingly difficult to access the top rate of payment, as indicated in table 1 of the presentation. This is mainly because the weekly pension rate is calculated on the average number of contributions made over a working life. The table shows the differences and band changes introduced in 2012, on which I will make some brief comments.

Originally, there were four band payments. In 2012, band 2, which was the band of between 20 and 47 average yearly contributions, was split in three. Until 2012, a person would receive 98% of the payment if he or she fell within this band. However, after the band was split into three, a person who made 20 contributions would only receive 85% of the top rate of the payment.

The rate of payment made to those in bands 3 and 4, which are now bands 5 and 6, was also reduced in 2012. I will cite the example of an individual who worked for a few months in 1968 before leaving the workforce to raise a family, during which time she did not make contributions, and subsequently returned to work in 2000. The average number of pension contributions she made would be divided by 48, which is the number of years between 1968 and 2016. In effect, the weekly pension rate would be much higher if the individual had not worked in 1968 as the average would be divided out over only 16 years. This means the woman in the example and women like her are being punished financially for choices they made decades ago. They are also losing out because the homemaker's scheme, introduced in 1994, is not backdated. As a result, these women, who would generally have carried out their caring duties in the 1970s and 1980s, derive no benefit from the scheme.

Age Action's research on this issue identified 36,000 individuals - one third of new pensioners - who had been negatively impacted by these changes between September 2012 and June 2016. This figure is now undoubtedly higher, and of this number, 62% were women. Those most negatively impacted have lost more than €30 per week or more than €1,500 per year. It should also be noted that many male pensioners have lost out as a result of the changes introduced in 2012 because their contributions were also broken.

Age Action urges the joint committee, in its role of providing Oireachtas oversight of the budgetary process, to consider two recommendations. First, the changes introduced in 2012 should be reversed and backdated in order that those currently affected are placed in the pre-2012 bands again, at least until moves are made towards the total contributions assessment approach planned by the Department of Social Protection for 2020. The second recommendation, which is perhaps a more long-term objective, is that the committee examine ways in which changes could be made to the budget to eliminate the gender pension gap, including the backdating of the homemaker's scheme to 1973 when the marriage ban ended. I thank members for their time.