Dáil debates

Tuesday, 11 April 2017

5:45 pm

Photo of Clare DalyClare Daly (Dublin Fingal, Independent)
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47. To ask the Minister for Social Protection his plans to alleviate the financial hardship that will be endured by many persons due to an absence of financial bridging in the social protection system and the time-limited nature of jobseeker's benefit (details supplied). [17757/17]

Photo of Clare DalyClare Daly (Dublin Fingal, Independent)
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This question arises from the massive race of the previous Government to increase the pension age in 2012 without putting in place any financial bridging arrangements to cushion the blow from the way in which our pension schemes operate, with the result that many people who took early retirement had their pension based on an un-coordinated basis until they reached the age of 65. However, upon reaching 65, the full State pension is deducted from that pension even though they are not receiving it. That is causing massive hardship I ask the Minister about his plans to address that.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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There is no statutory retirement age in the State, and the age at which employees retire is a matter for the contract of employment between them and their employers.

Where a person exits the workforce before reaching State pension age they may apply for either the jobseeker’s benefit or jobseeker’s allowance schemes. Jobseeker’s payments are paid to eligible jobseekers aged 18 to 66 years and all recipients of a jobseeker’s payment are subject to the rules of the scheme.

People in receipt of a jobseeker's payment must engage with my Department's activation measures and can face sanctions if they fail to do so. However, from January 2014, these criteria were eased for people aged 62 and over, such that they are not obliged to engage with the activation process. They are still able to voluntarily avail of an array of supports, which are available from my Department if they wish to return to work, training or education. Furthermore, the majority of these individuals will have to register with their local office only once a year and their payments will be paid directly into their bank accounts.

Once a person has exhausted his or her entitlement to jobseeker’s benefit, he or she may be eligible for jobseeker’s allowance, subject to the means test and other qualifying conditions. However, someone claiming jobseeker’s benefit from a date after his or her 65th birthday continues to be eligible for that payment until reaching State pension age.

5:55 pm

Photo of Clare DalyClare Daly (Dublin Fingal, Independent)
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Notwithstanding the Minister's answer, there is still an enormous gap because of the rules around the State contributory pension and indeed rules around pension schemes. I will give an example of a former Aer Lingus colleague of mine who took early retirement. His pension was €25,615 per year. He celebrated his 65th birthday in January 2017 but it was not much of a celebration because his pension was reduced by €15,150, a staggering drop of over €10,000 or over €200 per week. He did not have an entitlement to jobseeker's benefit because the six to nine months were used up and he was not entitled to an allowance because his pension, even though it had been butchered, was inadequate. Like many others, this man had worked all his adult life bar a couple of years at the end and contributed significantly to the system. There is an anomaly here and we need some form of financial bridging system to meet the gap because a gap is there and many people like this man are falling into it.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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There are anomalies. The Government made the right decision to increase the pension age. It might not be popular but it was necessary. The State pension age in the 1970s was 70. Average life expectancy in those days was 68 for a man and 72 for a woman so people paid into the pension system for 40 or 50 years and retired for a few years. We are now in a very different situation where people are working for 40 or 50 years and are retired for 20 or 30 years. The Deputy can understand why we need to increase pension age in line with life expectancy if we are to have decent pensions in the long term. However, it has thrown up anomalies, one of which involves people who are contractually required to retire at 65 by their employer and who cannot avail of the State pension until the age of 66. We are dealing with that through employment equality law and, hopefully, a change to the rules for public servants to allow them to work to 66 if they wish.

The other scenario raised by the Deputy has come up previously. I do not yet know what the solution to it is. We need to come up with a solution for it. I know that some pension schemes and some trustees have changed their own rules, and they can do that, to extend the bridging period. I know of schemes that have done that but, obviously, all schemes are not going to do that, which leaves some people in a difficult position. It would be hard to come up with a solution that would recognise the fact that every pension scheme has its trustees and they make their own rules.

Photo of Clare DalyClare Daly (Dublin Fingal, Independent)
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The problem is that the Minister does not have the solution but I would be somewhat reassured if I thought he was actively looking for one. What the question is saying is that we need to put a system in place that addresses this. The Minister calls it an anomaly. I call it a deliberate gap or a gap that has arisen because of the way we structure our State contributory pension scheme and the rules around the occupational pension schemes. In some cases, if the pension schemes absorbed it, it would put a strain on the solvency of the schemes when there are already difficulties - not because of actual solvency but because of the rules around that. I ask the Minister to get heads together in the Department to look at how private pension scheme rules and the State contributory pension can be matched up or married to address what is a heartbreaking erosion in quality of life for people who have worked for years. Let us remember that if we do not address this, people retiring in 2021 will have two years with no income - not just one year as in the case involving the man to which I referred.

Photo of Leo VaradkarLeo Varadkar (Dublin West, Fine Gael)
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I am aware of the problem. We are looking for a solution precisely because of the reason mentioned by the Deputy, namely, the fact that this issue will become twice as frequent in 2021 and three times as frequent in 2028 so it would be wise of us to find a solution as quickly as possible. Admittedly, it certainly would have been wiser when the change was made a few years ago to think through many of these consequences and the bad solutions in place. The ideal solution is for trustees of pension funds to do the right thing and extend the bridging for another year. This is what they should do but in cases where they do not, it leaves individuals very exposed to a reduction in their income through no fault of their own for that one-year transition period. While we do not yet have a solution, we will try to develop one.