Róisín Shortall (Dublin North West, Independent)
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I appreciate the opportunity to raise this matter which concerns an anomaly resulting from the decision to abolish the State transition pension from 2014 and what I believe to be a group of forgotten pensioners. The Government aims to save €60 million in a full year following the abolition of the State transition pension from next year. The effect is that, instead of a State pension being available to certain retired persons at the age of 65 years, from next year they will not be able to qualify for a State pension until they reach the age of 66 years. Based on the claim pattern of transition pensioners in recent years, we know that approximately 15,000 people are affected by this change. These are individuals who would have qualified for the transition pension up to the current year but who will not now qualify. Again, based on claim patterns in recent years, approximately 2,000 will be in the position where they have left work and have no entitlement to a State pension. These figures would be expected to grow in the coming years because of the demographics involved but also because it is planned to further raise the State pension age to 67 years in 2021 and 68 in 2028. Most of these 2,000 workers will be in a position where they will be forced to retire at 65 years, arising from long-standing contractual arrangements with their employers, but will be without a State pension on which to fall back. In some cases, they will, of course, be entitled to some form of occupational pension and, in others, some of them may, in fact, be able to find alternative work. In a great many cases, however, they will simply be left stranded. It will mean that many will be forced to sign on the dole for one year in order to have income support. They will face the ridiculous situation where, at the age of 65 years, after years of employment and, in some cases, a lifetime of unbroken employment, they will be forced to endure a gap year before the State will step in with a pension entitlement. They will be considered too old to work by their previous employer but too young to claim a pension from the State. As a recipient of jobseeker's benefit, they will be subjected to the same activation measures required of those genuinely seeking work.

They will end up competing for work and training places with much younger jobseekers.

The live register figures will be inflated next year, artificially raising our headline rate of unemployment. This is not just a problem in 2014 but will be a problem every year afterwards and will grow even worse as the retirement age is further extended. In 2011, the Government was forced by the troika to legislate to raise the pension age. I accept that there was nothing it could do about that. However, it has done very little since then to address the anomaly that has arisen as a result of that legislation.

It is outrageous that the State would effectively turn its back on people who have worked all their lives and tell them that now they have reached the age of 65, they must go on the dole. This is a real insult to that group of people who, in many cases, have worked all their lives. They are very much the forgotten pensioners, ignored by both Departments responsible for labour law and social protection. I call on the Minister to ensure this issue is addressed before the abolition takes effect from January 2014. It is simply too insulting to those people involved and it is a disgrace that there is no plan in place to address this serious anomaly.

Alex White (Dublin South, Labour)
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I thank the Deputy for raising this issue, which I am taking on behalf of the Minister for Social Protection. The sustainability of the pension system is a particular concern because of the demographic challenges Ireland faces, the associated increases in pension and other age-related costs and the deterioration in the public finances. The findings of the recently published actuarial review of the social insurance fund showed that the percentage of the population aged over 65 years is projected to increase from 11% of the total population in 2010 to 15% in 2020 and to 24% in 2060, that the pensioner support ratio is projected to decline from 5.3 workers for every individual over pension age in 2010 to 3.9 workers by 2020 and to 2.1 workers by 2060 and that in the medium to long term, pension-related expenditure will account for an increasing proportion of fund expenditure - rising from 57% in 2011 to 85% in 2066. This means that in the future, the task of financing increased pension spending will fall to a diminishing share of the population.

State pension transition is paid for a maximum of 12 months and is currently available to people who retire from work on reaching age 65, provided they satisfy the necessary PRSI contributions and are retired from insurable employment. This pension was introduced in 1970 when it was known as the retirement pension. It was designed to bridge the gap between the standard social welfare pension age, which at that time was 70 years of age, and retirement age. Over time, the age for State pension contributory pension was reduced to 66 years, with State pension transition being payable at age 65. This will now change in 2014 as provided for in the Social Welfare and Pensions Act 2011, to which the Deputy referred.

In 2014, State pension age will be standardised at age 66 and State pension transition will cease to be paid. In addition, the age at which State pension contributory will be payable will increase to 67 years from 2012 and to 68 years from 2028. This decision to increase State pension age was taken in the context of changing demographics and the fact that people are living longer and healthier lives and is one of a number of measures implemented to improve the sustainability of pensions for the future. The abolition of State pension transition removes the associated retirement condition which acts as an incentive to leave the workforce. This has been widely criticised as a barrier to older people remaining in employment. There is no such retirement condition attached to State pension contributory.

In terms of the overall numbers impacted from the abolition of State pension transition in 2014, an analysis of 2012 figures for State pension transition indicates that an average of just 13% of those awarded State pension transition came from employment in the period immediately prior to the receipt of this payment. A significant proportion - 51% - was already in receipt of a social welfare payment prior to claiming State pension transition. A similar result emerged from an analysis of 2011 State pension transition recipients. This would indicate that a significant number of people have already left employment well in advance of pension age. It also reflects the fact that there is no statutory retirement age in Ireland.

In terms of financial supports, social welfare benefits will continue to be available to the age of 66 for those who are contractually obliged to leave employment. Also, existing legislation provides that jobseekers whose benefit expires in their 65th year will continue to be paid benefit up until the age of 66. In order to improve pension sustainability and adequacy in the future, it is recognised that in line with increases in pension age, people should have the opportunity and be encouraged to work longer. In the employment relationship, responsibility for setting retirement age is a matter for the employer-employee relationship and the contract of employment. However, it is recognised that the range of policy areas which influence working and retirement decisions fall within the remit of a range of Departments and require a co-ordinated response if labour market participation rates and effective retirement ages of older workers are to improve.

In this regard, an interdepartmental working and retirement group chaired by the Department of Social Protection is currently considering cross-departmental policy issues that may support longer working and thereby improve the sustainability and adequacy of pensions systems. This group, which includes the Department of Jobs, Enterprise and Innovation and the Department of Justice, Equality and Defence, is considering the broad range of issues impacting on the labour market participation of older workers and will prepare preliminary proposals detailing measures which may encourage participation and retention in the labour market of older workers. As social structures in Ireland are changing rapidly, the structures of our social support need to change to accommodate this. The standardisation of State pension age at age 66 in 2014 is one of the measures planned which aims to improve the sustainability of the Irish pension system.

Olivia Mitchell (Dublin South, Fine Gael)
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There is very little time left but Deputy Shortall may ask a supplementary question.

Róisín Shortall (Dublin North West, Independent)
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I do not disagree with anything the Minister of State said but he has not addressed the issue I raised. I said that there was a need for a plan to be devised to deal with this anomaly. The Minister of State knows from his own background that people have contractual arrangements whereby they are required to retire at 65. The State is abolishing the State pension transition so people are being left high and dry between the ages of 65 and 66. Does the Minister of State believe it is fair that the State turns its back on people when they are forced to retire at the age of 65 who may have worked their entire life from 16 or 17 years of age, may have an unbroken work record of 48 or 49 years and paid into the social insurance fund for all of those years? Does he believe this situation should arise because it will arise for about 2,000 people and increasing numbers from next January? I am asking him to give an assurance today that the Departments of Jobs, Enterprise and Innovation and Social Protection will devise a plan to deal with this very unfair anomaly which will arise next January.

Alex White (Dublin South, Labour)
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I cannot say any more about the matter than I have in the Minister's response other than to draw the Deputy's attention to the working group which could and perhaps should consider the issues raised by the Deputy, including some form of plan. Any particular proposal as to what such a plan might contain should be put to that working group. I understand the issue raised by the Deputy but the legislation is there and the decision has been made in that regard.