Dr. Claire Keane:

It might sound like a bit of a cop out, but there is no correct level to have a benefit at. The Commission on Pensions and the Commission on Taxation and Welfare were established to look at those kinds of issues. In this case, the advice is to set the State pension at around one third of average wages. It used to be the average industrial wage. I think now they are moving towards having it as a percentage of average wages across all occupations. I suppose it is about looking at it to see if it is adequate. Some indicators that answer those questions for us are, for example, elderly poverty rates. We know that elderly poverty rates in Ireland have fallen substantially because of the active discretionary policy of increasing State pensions over time. On what the Deputy has said about deciding on a benchmark, I cannot say that it is the right or wrong amount because that is ultimately a decision. The decision has to be made by weighing up how much it costs, whether it is sustainable, etc. If we go with the advice that the State pension should be roughly one third of average earnings, indexation will allow us to sort of forget about whether it is keeping pace with prices or wages each year. If we automatically index the pension, then it will continue to stay that rate. However, it would suggest that if we decide to benchmark pensions at around one third of average earnings, then we would have to increase them in line with wage inflation to keep that benchmark. If we just increase them in line with prices, it would more than likely fall behind and in a few years' time we would have to play catch up again.

Looking at elderly poverty rates, yes, we do have people below the poverty line who are over 65. However, the poverty rates for the over-65 age group are substantially lower than those of other age groups. It is also important to look at other groups in society. For example, we know that there are very high poverty rates and very high deprivation rates among lone parents - much higher than among older age groups. It is important to monitor those measures, such as poverty and deprivation rates, among different groups in society or age groups. That allows us to determine whether an amount is adequate. Many people in Ireland who are over 65 and are below the poverty line are not getting that maximum State pension amount. These are people who are qualifying for a lower than maximum State pension amount. That might be something that has to be looked at. It tends to be people who have been in and out of work, might not have enough social insurance contributions or have been abroad and do not have the full insurance contributions to come back to Ireland. In general, if we decide on what an adequate benchmark is, then that is where the indexation helps, as we do not have to constantly monitor it each year to see if rates are falling behind for certain groups.