Mr. R?n?n Hession:

I thank Deputy Ó Cathasaigh. In terms of his suggestion that we have a graduated approach, we have not looked at this in detail but we are going to do a bit of work. This is how it works in a number of other countries. People can start at a higher replacement rate and it steps down over time. We have proposed various payment rates depending on the length of the contribution history. In some countries those with a longer contribution history have a higher replacement rate. The cap might be the same and then it will taper. These are models used internationally. We have had meetings with the OECD and we are looking at some of these alternative approaches. To some extent it is all about finding the right blend. There is also complexity in this. We know from the pandemic unemployment payment where we had step-down payment rates that there is a great need for communication so that people understand what is happening. Sometimes there can be angst around these step downs. We will have to see. This was the approach used when the pandemic unemployment payment was being wound down so we have this experience.

With regard to the cap and gross income, the €450 in the straw man translates to approximately 50% of gross average earnings. I do not know whether Deputy Ó Cathasaigh has a copy of the straw man. There is a table in it. People on €45,000 get €450 under the straw man, which gives them a replacement rate of 66%. Those on €23,600 get a replacement rate which is approximately the same. Somebody on €75,000 gets a replacement rate of 46%. As we would expect, the more people earn the more the cap affects them.