Dáil debates

Wednesday, 6 December 2017

Social Welfare Bill 2017: Report and Final Stages

 

7:45 pm

Photo of Pat BreenPat Breen (Clare, Fine Gael) | Oireachtas source

9 o’clock

I do not intend to accept these amendments. I wish to point out that the current rate bands applying to the contributory State pension were introduced from September 2012, replacing previous rates introduced in 2000. The rate bands prior to 2000 were less generous and the improved rate bands introduced in 2000 were a feature of the economic and political environment at that time. The economic crash changed the focus and while other payments were reduced as a result, the core rates of the pension, on which many pensioners were solely dependent, were maintained. Instead, the rates for new pensioners who had additional means and lesser PRSI contribution records were reduced.

The 2012 rate bands more closely reflect the social insurance contribution history of a person than those in place between 2000 and 2012. However, the current rate bands still provide pensions to people that are more generous than strictly proportionate with their level of contribution. A person with only 20 years of contributions over nearly 50 years will still get an 85% pension. This is an extremely good outcome for those people. It is estimated that to revert to the previous bands from January 2018 would result in an annual cost of well over €70 million in 2018 and this annual cost would increase by an estimated €10 million to €12 million each following year. The precise cost is difficult to arrive at as there would be new contributory pension claims made by people currently in receipt of either a non-contributory pension or an increase for qualified adult, IQA, payment.

Most countries have a contributory pension and there is nothing anomalous about those persons who have fewer contributions having lesser entitlements to contributory benefits such as a pension. Outcomes under our State pension system are more equal than in most EU countries with average payments of State pension payments to men and women at about parity, unlike the significant disparities which exist in many other countries where lifetime earnings are part of the pension rate calculation. The Department is examining in depth various options that would provide some relief to those who would have a higher contributory pension had the rate bands not been amended in 2012. If there are equitable changes that target such relief to those who were particularly affected by anomalies under the yearly average system, particularly if they had homemaking periods prior to the introduction of the homemakers' scheme, the Minister will ask the Government to consider if and how these might be financed.

As soon as the report is finished, the Minister intends to bring it to the next Cabinet committee on pensions, in which Members appear to be interested, which takes place just after Christmas on 18 January. Following that she will bring proposals to Government for consideration. This is a priority for the Minister and the Department and I do not consider it necessary to insert a statutory obligation and a timeline on a piece of work that is already in progress. The Minister made a commitment on Committee Stage of this Bill to take these steps and to publish the final report. There is no need for these amendments. Including a reference to "Cabinet" is not good legislative practice because there is an obligation on the Cabinet to be confidential and the word is normally not used in legislation as it could create a risk of ambiguity across the Statute Book. The Minister has given a commitment and this will go before the Cabinet sub-committee on pensions on 18 January. As soon as the Cabinet meeting is finished she will publish its considerations and the option papers. I ask Members to reconsider their amendments given that the Minister will do this when the Dáil returns after Christmas.

Comments

Monica Condron
Posted on 7 Dec 2017 9:42 pm (Report this comment)

Why do TDs such as Pat Breen continuously just reproduce material given to them by the Dept of Employment Affairs and Social Welfare. Anyone who has been affected by the pension anomaly will already have read this material many times in answer to letters sent to Government Ministers or TDs. Let me assure Pat Breen TD that the current rate bands do not "provide pensions to people that are more generous than strictly proportionate with their level of contribution". I will retire with a yearly average of 39.4 year (2048 total contributions at A rate) and also have over 6 contributions at a modified rate. I will retire next year on the 3rd band rate while someone with just 520 contributions over 10 years will retire on a full contributory pension. He may well think that this is just but I most definitely do not. How can this be considered equal treatment of everyone retiring when the averaging system gives different results depending on when you are considered to have 1st entered the workforce. I would do better under a total contributions scheme but it is highly unlikely that I will be allowed a reassessment in 2020 as pension changes have never been treated retrospectively despite what the Minister Doherty implied at the Select Committee on Social Protection on the 9th November.

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