Helen McEntee (Meath East, Fine Gael) | Oireachtas source

I am taking this on behalf of the Minister for Social Protection, Deputy Varadkar, who is not here because he had to go to Brussels, not because he does not want to engage. A wide range of pension issues were raised in the debate and they involve different potential policy responses. I intend to focus on the issues outlined in the motion, which were the main focus of the debate.

Everybody's key objective is to ensure pensions are sustainable and of value into the future. As has been stated, the cost of pensions has increased by over 60% in the past decade in real terms. We are a growing and ageing population, and any insinuation that we see this as a burden on society is unfair. As Minister of State with responsibility for older people, I think we value older people more than ever and we can grow from the knowledge they bring to us. The ratio of workers to pensioners will halve in the coming decades and the Opposition Deputies must acknowledge this. While we will continue to increase the rate of the State pension to improve its adequacy, this cannot be achieved without reforms that will also ensure its adequacy. A failure to do so would make the financing of pensions an even larger burden on already hard-pressed workers. Very few people are looking to increase the rate of PRSI or taxes they pay, yet that is what would be involved in reversing the reforms listed in the Opposition motion. I see no other funding proposals to match what is being sought this evening.

A person who has not made many contributions to the Social Insurance Fund will be supported by the system through the State non-contributory pension, which is 95% of the maximum contributory pension depending on his or her household means, or in the increase for qualified adults payment of 90%, which is based totally on his or her own means. This means for a couple, of whom only one spouse has a full PRSI record and contributory pension, the total income will be at least 195% of a full contributory pension. If they receive less than this in the State pension payments, it is because their total income, including State pensions and other means is greater than 195%, and very likely more than the value of two maximum rate contributory pensions. While this does not make them rich by any means, it makes them among the better off of those aged over 65. People aged over 65 are far less likely to be in poverty than the workers who fund the State pension.

Approximately half of those of pension age rely solely on the State pension, and over 70% of those in receipt of the non-contributory pension qualify at the full rate and over 80% of those in receipt of the increase for a qualified adult, IQA, qualify for the full rate. Where people qualify for only a reduced rate of non-contributory pension or the IQA it is because they have significant other income and will, generally, have a higher total income than half of the pensioner population who rely on the State pension.

We have a contributory pension system funded on a pay-as-you-go basis. Anybody who has not paid into the system to a great extent will still receive a pension if he or she needs it. The changes made in recent years have the cental objective of making the system sustainable, and failure to protect pension provisions into the future would hurt those most in need, many of whom depend solely on State pensions. It would be particularly unfair to today's workers, half of whom are working women who have to pay for child care and mortgages, to expect them to pay more and more into a pension system that, as has already been pointed out, would be broken by the time they reach the age at which they will depend on it.

There are issues with pensions, particularly with people being made retire before pension age. No simple solutions are in the Opposition motion and there is no pot of gold to deal with the issues. Even with the reforms attacked by the motion, the cost of pensions is increasing at over 60% per decade in real terms and only so many years of such growth can be managed before it all collapses. There is a danger of unintended consequences and, therefore, a need for a thorough debate and consultation on any proposed changes. I am glad to hear the total contributions approach will have a consultative process that will allow the various stakeholders to set out their priorities. Having the process ahead of the introduction of legislation will result in more balanced legislation being introduced and a better informed and more genuine debate in the Oireachtas when it is brought before us.

Pensions reform impacts not only on what happens now but on the outcomes for people in decades to come. The total contributions approach reform is a great example. It was announced in 2010 but was deliberately and rightly scheduled for 2020 by the Government of the time. The Government recognised that PRSI had been extended to the self-employed only two decades earlier and that postponing it to 2020 would allow people the opportunity to build up the required contributions. This Government may or may not be the one to introduce the legislation. It will depend on goodwill on both sides of the House to pass it. I can think of few issues on which cross-party consensus is more appropriate. Pension reforms are long-term projects and failure to make the right choices now will impact greatly on the choices of future Governments. It is in the interests of everybody that we have a sustainable pension system which provides a decent income to our older people if they need it or if they have contributed to it. As the Minister outlined previously, there has been significant restructuring of pension systems in other countries to meet the rising costs of pensions. The UK's new state pension is more than a quarter lower than our State pension.

As a young woman who has met many women in my office and many organisations as Minister of State with responsibility for older people, I agree pension equality for women must be addressed, and it will be. The Minister, Deputy Varadkar, is working on proposals to replace the current yearly average approach to State pensions with a total contributions approach, which will provide a fairer basis for the calculation of contributory pensions as well as removing anomalies. The issue of the age of retirement and people having the opportunity to stay in their employment beyond set retirement terms in many employment contracts is raised with me regularly as Minister of State with responsibility for older people. The issue has been brought to all our attention. The interdepartmental group on fuller working lives chaired by the Department of Public Expenditure and Reform recognises that mandatory retirement ages can compel employees to leave employment even though they may be fully able to contribute to work and would otherwise like to remain in the workplace.

I can think of many people in that position.

Deputies also mentioned the difference in the amount received and the fact that people often have to seek support which they never had to do before. This clearly goes beyond social protection legislation and, as Minister of State at the Department of Health, I note that it clearly goes beyond my Department's legislation too. The Minister for Social Protection and I have spoken to the Minister for Public Expenditure and Reform on this matter and the point that the largest employer in the country is the State has been made. Thought has been given to what can be done to make progress in the area. It is not, however, something that can be resolved through these proposals. It would be dishonest to pretend it could. The Government is very conscious of the issues that have been raised here tonight. I hope Deputies understand why some of these changes were made and the costs that would be involved in reversing them.

See this speech in context