Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

As Deputies know, the purpose of the Bill is to give legislative effect to the changes announced on budget day. In addition, this year reforms to the State pension are included in the Bill. These measures form part of the Government’s response to the Pensions Commission’s recommendations. One of the most important of these, and one I believe is endorsed by all members of this House, is to provide enhanced access to the State contributory pension for long-term carers. This will mean some carers will receive a contributory pension for the first time. The other pension reform included in the Bill is to introduce new flexibility to the State pension system. This will give people the choice to defer drawing down their State contributory pension up to the age of 70. This reflects changes in people’s attitude to working and retirement, and moves away from a one-size-fits-all approach. It will be particularly useful for people who reach pension age and find themselves short of the required number of contributions. These people will have the option to work for an extra year or two, should they choose to, in order to enhance their record and qualify for a higher payment.

I want to be clear that there is no change to the qualifying age for the State pension, which remains at 66. All we are doing is providing increased flexibility and choice for people. It will be up to individuals to decide what best suits their circumstances.

This year’s budget represents the largest social welfare budget package in the history of the State. It is important to point out that many of the social protection measures announced on budget day do not require primary legislation and, therefore, are not reflected in this Bill. For example, this week alone three lump sum payments totalling €230 million are being paid to help with the cost of living. This includes a €300 fuel allowance lump sum to 409,000 households. I am delighted that a lot more older people will get that payment as a result of the enhanced over-70s means test I introduced last year. Some 214,000 people with disabilities will receive a €400 disability support grant and 45,000 low-income working families will get a €400 lump sum payment. Further lump sum payments will continue to issue in the coming weeks.

We have acted swiftly to ensure people receive these payments over the winter months when they need the support most. At the end of January, a further double payment will be made to all pensioners, carers, people with disabilities, lone parents and other vulnerable groups. I know January can be a tough time for a lot of people and I was keen to put that additional support in place. I am pleased to advise that the January double payment will be paid at the new rates of payment, which will take effect at the start of the new year.

This is a progressive budget. I note the Parliamentary Budget Office, which is independent, estimates the lowest decile of households will gain 10.1% from the budget while the highest decile will gain 2%.

I will now go through the Bill by section. Section 1 provides for the Short Title, construction and commencement. Section 2 provides for definitions of relevant Acts. Section 3 is a provision to allow employers to collect PRSI contributions on any gain arising from employee share options. Currently, both the tax and PRSI returns are made on a self-assessment basis by the employee.

Sections 4, 5 and 6 provide for a €12 increase in the weekly rate of maternity benefit, adoptive benefit and paternity benefit from €262 to €274 from 2 January 2023. Section 7 provides for the extension of parent's benefit from seven weeks to nine weeks from August 2024. This means both parents can take up to nine weeks of paid leave each in the first two years of a child’s life.

Section 8 provides for a €12 increase in the weekly rate of parent’s benefit from €262 to €274 from January 2024. Section 9 is to give effect to the increases in the graduated rates of jobseeker’s benefit and jobseeker’s benefit for the self-employed. Section 10 is a technical amendment, involving the substitution of “illness benefit” for “disability benefit”, as that is the more modern name.

Section 11 removes any ambiguity that jobseeker’s assistance is paid on any basis other than a six-day-week calculation. Section 12 is a technical amendment to correct textual references that were incorrect. Section 13 provides for an extension of child benefit to 18-year-olds in full-time education from September 2024. This was a key priority for me in the budget. With many children now starting primary school at age five and an increase in pupils doing transition year, there has been an increase in the number of 18-year-olds still in secondary education. While I would have loved to have applied this measure from the start of the calendar year, I believe the extension of child benefit to 18-year-olds in full-time education is a long-term change for the better and will support families across Ireland into the future.

Section 14 provides for a €54 increase in the weekly income thresholds of working family payment for all family sizes, ensuring more families can qualify for this important payment. Section 15 makes changes in relation to the credit union personal microcredit loan, or the “It Makes Sense” loan. Section 16 is a technical amendment to replace references to "old age (contributory) pension" with "State pension (contributory)".

Section 17 and Schedule 1 provide for increases in the rates of social insurance payments, including a €12 per week increase in the personal rate of benefit. They also provide for an increase in relation to qualified adults and qualified children, where relevant.

Section 18 is a technical amendment to correct a reference in the supplementary welfare allowance provisions.

Section 19 and Schedule 2 provide for increases in the rates of means-tested payments, including a €12 per week increase in the personal rate as well as increases for qualified adults and children.

Section 20 provides for an increase in the monthly rate of payment of domiciliary care allowance from €330 to €340 from 1 January 2023. Last year, I was pleased to be the first Minister to increase this payment since 2009. This year, I am increasing it again by €10 per month. I am pleased to advise that domiciliary care allowance recipients will also receive the €400 lump sum carer’s support grant. I am also pleased to inform the House that I signed regulations earlier this year that will allow a parent or guardian to receive domiciliary care allowance if the child remains in the care of the hospital after birth if the other conditions of the scheme are met. This is a vital support for families who find themselves in those very difficult circumstances.

Sections 21 to 28, inclusive, are amendments to ensure that illness benefit and injury benefit are not paid on days for which statutory sick pay is paid by a person’s employer and to make arrangements for payment of statutory sick pay where an absence spans the end of a year.

As set out in my opening remarks, the Bill also carries a number of provisions to give effect to two important State pension reforms. These relate to enhanced pension provision for long-term carers and the introduction of a voluntary system of pension deferral. There are also consequential changes to PRSI provisions. Sections 29 to 34, inclusive, relate to the changes required to social insurance contributions in light of the introduction of the option to defer drawing down the contributory State pension. Currently a person’s liability for PRSI ceases on reaching age 66. However, for those who turn 66 from January 2024 and who choose to defer drawing down their State pension, the social insurance rules need to accommodate a later date for this liability to cease. This will be the date that the person is awarded their State pension or age 70, whichever comes first.

Section 30 changes the criteria relevant to becoming an “employed contributor” for the purposes of the Act. This now extends the criteria past age 66 until a person is awarded the contributory State pension or reaches 70, whichever comes first.

Section 31 relates to the payment of employee contributions on the exercise of employee share options. Again, this provision extends the criteria past age 66 until a person is awarded the contributory State pension or reaches 70, whichever comes first.

Section 32 relates to the criteria relevant to becoming a "self-employed contributor" for the purposes of the Act. Again, this provision extends the criteria past age 66 until a person is awarded the contributory State pension or reaches 70, whichever comes first.

Section 33 relates to the criteria relevant to becoming a "voluntary contributor" for the purposes of the Act. This amendment extends the criteria for becoming a voluntary contributor to those over 66 until they are awarded the contributory State pension or reach 70, whichever comes first.

Section 34 amends section 25 of the Act and is connected to the previous amendment for voluntary contributors and provides for a similar extension to those over 66.

Sections 35 to 43, inclusive, relate to the changes required to certain social welfare benefits in light of the introduction of the option to defer drawing down the State pension. Currently, a person’s entitlement to most social welfare benefits ceases on reaching age 66 and they become eligible for a State pension. However, for those who turn 66 from January 2024 and who choose to defer drawing their State pension, the provisions relating to some of these benefits need to change so as to accommodate access to support for short-term contingencies such as illness or job loss. For those reaching 66 in January 2024, instead of the benefit ceasing at age 66, these benefits will cease at the date that the person is awarded their State pension or reaches 70, whichever comes first. As there may be people who are in receipt of one of these social welfare benefits when they turn 66, they will be given an option to remain on that payment if their intention is to choose to defer their contributory State pension, provided they make an application to do so.

Section 35 relates to eligibility for illness benefit, and provides that instead of the benefit ceasing at age 66, eligibility will cease at the date that the person is awarded their State pension or reaches 70, whichever comes first.

Section 36 allows a person in receipt of illness benefit on reaching 65 to apply to remain on the benefit.

Section 37 amends section 46A of the Act, which relates to eligibility for partial capacity benefit. Similar to the change to illness benefit, this provides that instead of the benefit ceasing at age 66, eligibility will cease at the date that the person is awarded their State pension reaches or 70, whichever comes first.

Section 38 to provide that, similar to illness benefit, if people on partial capacity benefit is approaching their 66th birthday, they must apply to remain in receipt of the benefit.

Section 39 relates to the eligibility for jobseeker’s benefit, and again provides that instead of the benefit ceasing at age 66, eligibility will cease on the date that the person is awarded their contributory State pension or reaches 70, whichever comes first.

Section 40 is a technical amendment to allow jobseeker’s benefit to be claimed up to 70 years of age.

Section 41 amends section 67 of the Act, which relates to the duration of payment of jobseeker’s benefit, to provide that, similar to illness benefit and partial capacity benefit, a person must, if they chose to do so, apply to remain on the payment when reaching age 66.

Sections 42 and 43 relate to eligibility for jobseeker’s benefit, self-employed, and mirror the same changes that were made to jobseeker’s benefit.

Section 44 amends section 108 of the Act to provide for the expansion of the eligibility criteria for the contributory State pension to now include those up to the age of 70. The provision also provides for entitlement to a higher rate of pension at the relevant age of claiming, whether it is 67, 68, 69 or 70.

Section 45 provides for attributing contributions to long-term carers who have been caring for an incapacitated person for more than 20 years. This is achieved by attributing the equivalent of paid contributions to these long-term carers to cover gaps in their contribution record for the purposes of the contributory pension. The section sets out the criteria to be met to qualify for long-term carer’s contributions. These criteria are based on the existing caring requirements on other schemes such as carer’s allowance and carer’s benefit. The section provides for the contributions to be attributed to those who reach age 66 in January but also those who are already past age 66. My Department launched a system for registering for these long-term caring contributions in September and I encourage anyone who is or has been a long-term carer to register these periods through mywelfare.ie.

Section 46 amends section 109 of the Act to amend the qualifying conditions for contributory pensions so that long-term carer’s contributions will be considered as qualifying contributions towards the contributory pension. The section also amends the qualifying conditions to take into account contributions after the age of 66 when calculating the contributory pension. Section 46(1B) provides for managing the situation where a person may be in receipt of a payment from the Department after age 66 while seeking to avail of a higher rate of pension at a future date. The duration that the person is in receipt of one of the relevant payments in Schedule 5A will reduce the age at claim for any higher rate of pension by an equivalent period. The section also makes a consequential amendment to regulations that can be made for long-term caring qualifying contributions as they apply to those with modified social insurance contributions.

Section 47 amends section 110 of the Act. This is a consequential amendment to take into account that a self-employed contributor may defer claiming their pension until attaining 70.

Section 48 amends section 111 of the Act, which relates to the rate of State pension payable. There will be five rates of payment for State pension, dependent on the age a person is when they draw down their pension. These rates will be set out in the budget annually and based on actuarial factors, which will be reviewed every five years in line with the actuarial review of the Social Insurance Fund. Where the actuarial factors change based on any future review, a lead-in time to notify future pensioners will be provided. They will give approximate rates based on the January 2024 rate of the contributory State pension of €277.30 as follows: €290.30 at age 67; €304.80 at age 68; €320.30 at age 69; and €337.20 at age 70. The increase for a qualified adult at each stage will also be adjusted. l intend to table a Committee Stage amendment to insert these rates into Schedule 2, subject to Government approval. Once a person claims their pension, they remain on that rate for life, subject to any budget changes. A person’s rate of payment will be the same regardless of whether he or she claims the pension from his or her birthday, for example, 67 years, or at any time prior to his or her next birthday.

Sections 49 and 50 relate to eligibility for, and duration of, the back to work family dividend.

These provisions mirror the equivalent amendments to the illness benefit, partial capacity benefit and jobseeker's benefit set out in sections 35 to 41.

Section 51 provides for the insertion of rates of the State contributory pension for ages 66, 67, 68, 69 and 70 into Schedule 2.

Section 52 provides for the insertion of a new Schedule 5A into the Act, of specified weekly payments that will reduce the rate of deferred pension if incurred over the age of 66. Deputies will be aware that the Pensions Commission recommended the full transition to a total contributions approach only for calculating pension, to be implemented as soon as possible with a transition period of ten years. The commission also recommended that the current model of interim total contributions approach should become the definitive total contributions approach, that is, 40 years or 2,080 contributions be required to qualify for a maximum State contributory pension payment rate. This includes provision for ten years of PRSI credits and 20 years of home caring periods but with a cap of 20 years of combined PRSI credits and home caring periods. The total contributions approach is a fairer and more transparent system whereby the person’s lifetime contribution will be more closely reflected in the benefit received.

It is proposed that the transition will begin on a phased incremental basis over ten years commencing in 2025. Heads to provide for this transition were included in the general scheme of the Bill and were referred for pre-legislative scrutiny to the Oireachtas Joint Committee on Social Protection, Community and Rural Affairs and the Islands. I thank the committee for its deliberations during pre-legislative scrutiny and for its report. Due to time constraints, the drafting of these provisions was delayed but it is my intention to introduce these provisions on Committee Stage.

I thank Deputies for their patience. Going through a Bill section by section is rarely riveting but it needs to be done. The measures contained in the Bill will have a positive impact on people's lives. Notwithstanding the fact that we had the largest social protection package in the history of the State, I still could not do everything I wanted. The reforms we are making to the State pension are positive. In particular, providing our long-term carers with access to a State pension has been a key priority for me since my appointment as Minister and I am delighted to deliver on this commitment. I commend the Bill to the House and I look forward to hearing Deputies' contributions. Go raibh maith agaibh.

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