Thursday, 3 February 2022
Ceisteanna Eile - Other Questions
6. To ask the Minister for Employment Affairs and Social Protection her strategy to address the proposal to remove the exemption to pay PRSI on supplementary pension income, occupational and personal pensions and public sector pensions, as contained in the report of the Commission on Pensions; and if she will make a statement on the matter. [5384/22]
The proposal of the Commission on Pensions to change the PRSI system and charge PRSI on supplementary pensions is a real worry for people, especially those for whom the pension is the only source of income. Can the Minister outline the strategy for dealing with this? Will she resist it?
The report of the Commission on Pensions was published on 7 October 2021. It established that the current State pension system is not sustainable and that changes are needed. The report set out a wide range of recommendations in relation to the State pension system and social insurance fund, including PRSI base broadening measures.
In the interests of older people and future generations of older people, the Government intends to consider the comprehensive and far-reaching recommendations in the commission's report very carefully and holistically. The report has been referred to the Joint Committee on Social Protection, Community and Rural Development and the Islands. That committee published its views yesterday. My officials and I will obviously include these in our deliberations over the coming weeks.
Separately, as set out in its terms of reference, the Commission on Taxation and Welfare is considering the report of the Commission on Pensions in the context of its review of potential changes to the social insurance system, including relevant PRSI rate and coverage recommendations. In addition, my officials are examining each of the recommendations and consulting across government through the Cabinet committee system.
It is really important that we complete that work and obtain those views before reaching conclusions on any one recommendation, such as the recommendations to remove the exemption to pay PRSI on supplementary pension income, occupational and personal pensions and public sector pensions. I intend to bring a recommended response and implementation plan to the Government by the end of March this year.
The State pension is the bedrock of the pension system in Ireland. It is extremely effective at ensuring that our pensioners do not experience poverty. This Government is committed to ensuring that this remains the case for current pensioners, those nearing State pension age and today's young workers, including those who are only starting their careers.
I hope this clarifies the matter for the Deputy.
As the Minister stated, the State pension is a bedrock of the system; however, there are people who, for different reasons, do not qualify for one. The draft commission report recommended that pensioners pay more PRSI, but through having the solidarity rate and by the removal of the exemption on supplementary pensions. A supplementary pension sounds like something extra. For many, it is their only source of income.
I am pleased that the joint committee published its report and made recommendations on the PRSI changes, but the whole question around supplementary pensions needs to be addressed. Pat, a constituent of mine, and a number of others have written to me to outline that the supplementary pension is their only source of income. They have already paid the pension levy. Purchasing power has been reduced. What certainty can the Minister give people, especially those in receipt of supplementary pensions, that they will not see a cut to their pensions?
There is a process, and I have outlined what is still to happen in that regard. The Deputy will appreciate that I am not in a position to stand here today and tell the Deputy which recommendations the Government will accept or otherwise. The discussions will continue over the coming weeks and months. The plan is that the Government will outline its full response to the commission's recommendations by the end of March. I appreciate that there are concerns, but let us not be in any doubt that there are no easy options. People are living longer, which is very positive, but it means there are challenges.
Today, there are 4.5 people working for every pensioner. By 2050, there will be two people working for every pensioner. The current pension system is not sustainable and there is no getting away from that fact. Of course, this is not a problem that is unique to Ireland. Countries all over the world are grappling with the same issue.
Many of those who contacting me point to the fact that was no pensioner on the Commission on Pensions. They worry about how they are going to have their say and how their voice is going to be part of the whole engagement. In the absence of pensioner representation, they see these different proposals coming forward. They are threatening proposals that they feel will reduce their only income. How does the Minister propose that their voices will be heard within the system in view of the fact that there was no pensioner on the commission?
Actually, there was a broad range of people on the commission, including a representative of Age Action or Age Friendly Ireland. I cannot remember off the top of my head which organisation was represented. It was either Age Action or Age Friendly Ireland. There were a lot of experts on the commission. As the Deputy will be aware, Ms Josephine Feehily headed up the commission. We included a broad range of people. When I announced the members of the commission it was broadly welcomed by everybody that there was a good mix of people. There are some young people, older people, academics, actuaries and experts on pensions. The unions, including SIPTU, were represented. A broad range of people were represented. The commission spent a great deal of time considering the matter. The report runs to hundreds of pages. To be fair to the members, they did a huge body of work. As I said to the Deputy earlier, I am not going to start commenting on any specific measure. We cannot pick and mix. It is a package of measures and the Government will make a decision on it. We will bring a recommendation forward at the end of March.