Tuesday, 17 November 2015
Ceisteanna - Questions - Priority Questions
State Pensions Reform
60. To ask the Tánaiste and Minister for Social Protection if she proposes to introduce legislation to deal with the position of persons who no longer qualify for a pension upon reaching 65 years of age; and if she will make a statement on the matter. [40183/15]
The Social Welfare and Pensions Act 2011 provided for increases in the State pension age. This process began in January 2014 with the abolition of entitlement to the State pension (transition) at 65 years of age, thereby standardising State pension age for all at 66 years. The changes introduced in 2011 were on foot of a Government commitment which arose out of the memorandum of understanding signed with the European Union, European Central Bank and International Monetary Fund in November 2010.
The purpose of these changes is to make the pension system sustainable in the context of increasing life expectancy. More people are living to pension age and living longer in retirement. In that context, the duration for which an average pension will be paid will continue to increase, albeit at a slower rate than if no such changes had been provided for in legislation.
The number of pensions is increasing by approximately 17,000 annually as a result of demographic change. This has significant implications for the future costs of State pension provision which is increasing by close to €1 billion every five years. In 2013, the cost of the State pension transition was €137 million. It was estimated at the time that the net saving resulting from its abolition, when taking into account that many people were in receipt of other payments at the lower rates applicable to those under 66, would amount to €33.5 million in 2014 and approximately €65 million in 2015.
All short-term social welfare schemes, including jobseeker's schemes, are payable to age 66. Jobseekers whose benefit expires in their 65th year will continue to be paid benefit up until the age of 66, when they can come into receipt of the State retirement pension. There are no plans to introduce legislation to change from the current position.
I thank the Minister for the reply. As she will be aware, a great many people are forced to retire at 65. Take those who retire, through no choice of their own, at the age of 65 but cannot qualify for the old age pension until they are 66. Accordingly, there is one year of a gap. During that year, the Department insists these people actively seek employment.
As the Minister of State, Deputy Kevin Humphreys, can tell the Minister, we had a debate on this on Committee Stage of the Social Welfare Bill 2015 last week. My understanding from what the Minister of State told me then was that the requirements for getting involved in activation schemes, etc., were abolished from the age of 62, whereas people from the ages 65 to 66 still have to be actively seeking work. That is my understanding of his reply to me then. I raised this question for clarification.
Several years ago, I introduced some fundamental reforms as to how people over 62 years of age right up to 66 were dealt with by the Department of Social Protection. First, once people reach the age of 62, if they so wish, they are placed on a yearly signing. In other words, they only need to sign on once a year. If they wish, they can transfer their payments to an electronic fund transfer, to whatever appropriate mechanism or they can continue as they are with their current collection arrangements. They are not subject to the commencement of mandatory activation measures but they may avail of employment supports should they wish to do so. They will not be subject to any activation-related sanctions, such as penalty rates of any kind. The provisions of the circular on that do not apply to anybody over 62. People are already engaged in activation and we would expect them to continue to finish whatever it was they were doing in it. For people over 62, we have allowed for two streams. If they wish to be involved in activation, education or other opportunities, they can avail of them if they so wish. If they do not wish to do that, they can sign on once a year and receive their payments as they see fit. These arrangements are now working successfully. If one comes into one’s 65th year, one’s jobseeker’s benefit - if one is entitled to it - continues until one reaches 66 years of age.
Take the case of somebody who is compulsorily retired at 65 and then applies for jobseeker’s benefit because he or she cannot get a job.
Is the Minister saying that in order to qualify for jobseeker's benefit this person does not have to establish or can never be asked whether he or she is actively seeking or available for work? I need clarification of the matter because what she has said seems to differ somewhat from the reply we received at the committee. Has she been contacted by her colleague, the Minister for Public Expenditure and Reform, about the matter? On 9 October Mr. Jack O'Connor, general president of SIPTU, received a letter from the Minister for Public Expenditure and Reform which stated:
You have raised an important issue with me regarding the income gap faced by workers who are required to retire at age 65 given the age for entitlement to the State Pension (age 66).
There would appear to be a disconnect between policy and practice here that needs to be examined. Furthermore, I am also conscious that the State Pension age is set to increase ... to age 67 ... and to age 68 [etc.], which could exacerbate the problem you have outlined.
In light of this, I think we need to move now to address this issue in a comprehensive and sustainable way, including through legislation as required.
To this end, I intend to bring a Memorandum to Government shortly-----
To be absolutely clear, we have a two-option process for persons aged 62 years and older. The option chosen is entirely at the person's discretion. If he or she wants to avail of an activation scheme and are currently involved in such a scheme, he or she would be expected to continue in that regard. If he or she does not wish to opt for an activation scheme, he or she does not have to so opt. This might, in particular, be the case for people who are a little older. They will go to their local social welfare office and thousands of Deputy Willie O'Dea's constituents will have had this experience. They will be told their options and asked which one they wish to choose. We must remember that some people, when aged more than 62 years, if they have, for instance, been working outdoors or on the heavy side of the construction industry, may not wish to take on heavy work again. They might, on the other hand, wish to be involved in something like a community employment scheme.
No; it is entirely optional. It is an option for them to say to a social welfare officer that they really want to continue working and would like to take part in a community employment scheme. It is also an option for them to say they do not wish to take part.