Pat Breen (Clare, Fine Gael) | Oireachtas source

I welcome the opportunity to contribute to the debate and I am delighted to see the Minister in the Chamber. A sizeable sum, €19.6 billion, will be spent in the Department of Social Protection next year. It is a lot of money, and 2.259 million people benefited from payments from the Department last year. It is a Department with a huge budget and most people interact with the Department at some stage of their lives, particularly those who are unemployed or in receipt of family or retirement allowances. In this context the Minister had to reduce spending by €226 million, but I am pleased that she managed to protect core social welfare payments again this year, particularly the rates of the child benefit and the State pension. The child benefit payments are an important source of income for families and I would have been concerned at the impact that a cut in this payment would have for middle- and low-income families. The money is extremely valuable.

Given the jobs crisis the Government inherited, a considerable amount of money is now expended on the various jobseeker programmes and related payments. Reducing the number of people on the live register is critical if we are to reduce the Department of Social Protection budget. We are making progress, as was seen in the figures published yesterday showing that the national unemployment rate has fallen for the 17th consecutive month to 12.5%. It is a fantastic achievement considering it was 15.1% two years ago. In my constituency of County Clare, for example, 7% fewer people are on the live register than 12 months ago, amounting to 8,947 people, down from 9,628. While the unemployment rates are still very challenging, and we meet the unemployed in our constituency offices, the trends are positive and indicate that various job activation measures introduced by the Government are working.

Breaking the cycle of long-term unemployment is critical because the longer a person is unemployed the more difficult it becomes for that person to get back into the work system. The JobsPlus programmes, whereby the Government pays €1 in every €4 as an incentive, will play a key role in assisting people who are on the live register to get back into the workforce. I welcome its introduction and the fact that the scheme has been extended to include the JobBridge programme. When people opt for internships, they participate on the basis that not only will they improve their skills base but they will have a realistic opportunity of securing employment. I encourage JobBridge employers to embrace the scheme.

On a number of occasions in the House, I have raised the community employment, CE, and Tús schemes. In order to qualify under the part-time integration option, a person over 25 must be in receipt of a qualifying social welfare payments for 12 months. In a number of cases, people may have taken up part-time work for very short periods and do not qualify for CE schemes because they do not have an unbroken period of 12 months on social welfare. I have received complaints from constituents that when they complete 12 months on the scheme, they cannot be retained and they simply go back and sign on the live register and cannot reapply to the scheme for a further 12 months. Some CE schemes, which are important in rural areas, have vacancies and people want to take up these vacancies but are not being facilitated. I ask the Minister to look at this situation, with a view to introducing a more flexible approach.

The other area that I wish to address is pensions. Pensions are a ticking time bomb. People are living longer, with life expectancy for men currently at 76.7 years while that for women is 81.6 years.

I am thankful that people are living longer, but the increased life expectancy poses a challenge that needs to be addressed, particularly given the fact that approximately 900,000 people in the country have no provision for a pension other than the State pension. In addition, the pensionable age is set to increase to 67 in 2021 and to 68 by 2028.

Most employment contracts in this country oblige people to retire at 65, so the question arises of how people will fund themselves from the time they retire until they receive the State pension. The State transition pension will be abolished from 2014 and I have met several people who are on the verge of retirement and who are very concerned about this. After a working life of 40 years they would have reasonably expected that the gap between their retirement and qualification for the State pension would be funded. Given that they will now be claiming jobseeker's benefit, these people are fearful that they will face penalties if they do not take up training or education during this period. I am pleased that the Minister has now moved to address this issue and that she is to exempt people over 62 from facing penalty rates if they refuse to engage with the Department on offers of training or education. This is very welcome, given the lifelong contribution they have made to this country. I thank the Minister for that.

There is a further matter to be clarified. In the gap year from retirement to the State pension, people will now be claiming jobseeker's benefit. Under the current rules this only applies for nine months, so what will happen after that period? This needs to be clarified, especially as the gap is due to increase by three years in 2021.

I also ask the Minister her views regarding the retirement age, which is almost universal across both the private and public sectors. Are there any plans to extend this retirement age in line with the plans to increase the State pension age?

Not only do we have the challenge of funding retirees during the gap period between retirement and receipt of the State pension, but we also have many defined benefit pension schemes in deficit. I welcome the fact that the Minister is introducing measures to address the ongoing difficulties with defined benefit schemes. Like many Deputies in this House, I have received correspondence from former employees of Aer Lingus, particularly those who are on deferred pensions. Under the current restructuring proposals they claim that they stand to lose 57% of the pension they expected to receive when they reach retirement age. In addition, I understand that the kernel of the problem for deferred members of defined pension benefit schemes goes back to the Social Welfare and Pensions Act 2009, which removed the protection for deferred workers. In the Irish aviation superannuation scheme there are approximately 3,687 people who are on deferred pensions, who between them have long years of service. Perhaps the Minister would clarify whether the changes being introduced in this Bill will provide protection for deferred members of defined benefit schemes.

Many argue that if there is to be real pension reform, our legislation should be moving more in line with that of the UK and the USA, where work pensions are protected through legislation which requires employers to properly fund the schemes. The OECD review of the Irish pension schemes reported that the protection in Irish legislation for defined benefit members was weak, and the report also stated that the legislation "allows any sponsor to walk away from [defined benefit] pension plans, shutting them down, without creating a high priority debt on the employer." It concurs with the views expressed by deferred Aer Lingus employees that the priority currently given to pensioners before other members if a scheme winds up creates considerable inequality among members, and this outcome is particularly harsh for those who are close to retirement. The OECD recommends that healthy plan sponsors should not be allowed to walk away from defined benefit plans unless assets cover 90% of pension liabilities.

Right across various sectors we are seeing schemes that are underfunded, and this has been exacerbated by the economic collapse. It is a big problem because, as I understand it, only approximately 40% of schemes are fully funded, although up to 85,000 people are paying into defined benefit schemes. I would appreciate if the Minister could clarify her proposals to ensure equity for all members who have contributed to a defined benefit scheme.

Addressing unemployment remains the single biggest challenge for the Government and I welcome the priority that the Minister has placed on getting people back to work. These include the JobsPlus scheme, JobBridge, the various community employment and Tús initiatives, the youth guarantee scheme and the roll-out of the one-stop-shop Intreo offices for employment supports. I commend the Minister on her work and the fact that she has been able to save money even in these difficult times.

See this speech in context