Denis Naughten (Roscommon-Galway, Independent)
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I move:

That Dáil Éireann shall take note of the Report of the Joint Committee on Social Protection, Community and Rural Development and the Islands entitled "Response to the Report of the Commission on Pensions", copies of which were laid before Dáil Éireann on 3rd February, 2022.

I am a full-time athlete, a Leas-Cheann Comhairle. I am looking forward to participating in the world indoor games because I have definitely qualified after coming up and down those stairs.

I thank the Ceann Comhairle and the Business Committee for the opportunity to debate the report of the Joint Committee on Social Protection, Community and Rural Development and the Islands entitled: Response to the Report of the Commission on Pensions. I thank the members of the committee for their work on this report and for their attendance here this evening. In particular, I thank our researcher and policy officer, Mr. Jack Savage, who carried out a great amount of policy work on the report that has been produced by the committee.

The committee’s report was published in response to the report of the Commission on Pensions and on foot of a request from the Minister for Social Protection, Deputy Humphreys. The provision of the State pension is one of the most important aspects of the social protection system, rewarding those who have contributed to the State through employment, through work in the home or as a family carer.As such, the committee was pleased to be able to provide its views and contribute to this timely and sensitive debate.

The Commission on Pensions published its final report in October 2021. The commission was tasked with providing the Government with a range of options to ensure the sustainability of the State pension into the future. The committee was informed that the ratio of workers to those in receipt of the State pension will decline significantly into the future. Currently that ratio is 4.5 workers for every one pensioner. This is expected to decrease to 2.3 workers to every pensioner by 2050. The commission put forward four options or packages in its final report and recommended package 4.

The committee considered each package during the course of its deliberations before deciding in favour of the implementation of package 3. Packages 3 and 4 contain an increase in PRSI for employees, employers and the self-employed as well as an annual Exchequer contribution to the Social Insurance Fund, SIF. The committee is not in agreement with the specific increases in employee PRSI contained in this package but believes this represents the fairest way to maintain the PRSI base and tackle the forecasted deficit in the SIF.

The major difference between package 3 and package 4, as put forward by the commission, is the increase in the pension age contained in package 4. While this increase is at a much slower rate than previously announced, the committee rejected this increase on a number of grounds. It is the opinion of the committee that the State pension is a fair expectation following 40 years of work. The committee is unconvinced that the increase in the State pension age would have the desired effect of closing the deficit. The committee heard of different figures of estimated savings that were provided by different bodies for this potential increase in the retirement age.

The committee also discussed alternative payments that are provided to individuals who are forced to retire at the age of 65 due to compulsory retirement clauses in their work contracts. The committee is of the opinion that increasing the qualifying age for the State pension, while simultaneously providing alternative payments to those forced to retire, undermines the argument that increasing the qualifying age for the State pension will improve the fiscal position of the SIF. The SIF pays the majority of social protection payments. Therefore, while the money would not be listed as pension expenditure, it would still be paid through the same fund.

While the committee is aware that other social protection payment rates are primarily lower than the State pension, the impact of the age increase will be minimal unless the issues I outlined are rectified.

On the issue of compulsory retirement, the committee has recommended that legislation is developed to remove compulsory retirement clauses from contracts. This is a fundamental recommendation in our report. Furthermore, we are recommending that this legislation must be retrospective and apply to current contracts as well as new ones. It is vital that this aspect is implemented to fulfil the series of recommendations we have made because this is a cornerstone of the recommendations. The committee believes that those over the age of 65 years who wish to remain in employment should have no legal barrier to doing so. The committee heard evidence of the negative physical and mental health impacts that forced retirement can have on people. The committee's recommendations focus on providing those aged over 65 years with a choice, either to continue working or to retire. Each individual has different circumstances and the choice is paramount in this debate.

Similarly, the committee discussed the issue of flexibility and noted that the commission suggested that some people would continue to access their State pension at the age of 65 years if they had 45 years of PRSI contributions. The committee welcomes the suggestion of this level of flexibility and recommends that this should be the case once somebody reaches 40 years of contributions, not 45 years. The committee is of the opinion that this is particularly important for those engaged in manual labour and physical work.

The committee made several recommendations regarding PRSI in its report. The PRSI receipts primarily fund the Social Insurance Fund and that is why changes made to PRSI are important to future provision of the State pension. First, the committee has rejected any attempt to move those over the age of 65 years who remain in employment to class K PRSI. This is because class K offers no benefits and does not count towards an employee's PRSI contributions. The committee is of the opinion that all contributions paid by employees should be part of their contribution record.

The committee has accepted the changes to the class S PRSI that are laid out in package 3. This is for various reasons. Class S PRSI was introduced in 1998 for self-employed workers and is currently 4%, or €500 per year, whichever is the greatest. However, self-employed workers do not have an employer contribution to their record. When class S PRSI was introduced, self-employed workers were only entitled to a very limited number of benefits through the SIF. However, changes in recent years have ensured that self-employed workers are now entitled to 93% of the benefits provided through the SIF. As such, the committee is of the opinion that attempts must be made to equalise the contributions made on behalf of self-employed and employees. However, the committee recommends that any changes to class S PRSI be gradual and well-communicated so self-employed workers are given enough notice and can ensure that they are not taken by surprise. Significant changes to PRSI should not take place over short periods of time.

The committee also discussed changes to class A PRSI. The commission put forward suggested changes to both the employee and employer contribution rates. While the committee agrees with this in principle, the exact rates should be considered further. The committee is of the opinion that Ireland already levies a significant amount of tax on workers and that the PRSI class A contributory rate of between 6% and 7% by 2050 could be unfair. The committee noted in its report that Ireland has a low rate of employer's PRSI contribution when compared with its European counterparts. The committee recommended that increases to PRSI contributions are investigated further to make sure that they are increased in the fairest way possible.

The committee is also of the opinion that the terms of reference provided to the Commission on Pensions were relatively narrow and, as such, prevented it from developing new measures to combat the explicit deficit in the SIF and instead focus on changes to mechanisms currently in place. Before I continue, I wish to make it known that the committee is very thankful for the work carried out by the commission and greatly respects and acknowledges the level of work it carried out in a relatively short period of time. However, the committee decided to look beyond the scope of the commission and has discussed two possibilities that would counteract the deficit in the SIF that is expected into the future. First, the committee discussed the need for new taxes on wealth to be examined. This has not happened yet and while the committee is uncertain on the format whereby this could be developed, new ways to create revenue should not be taken off the table. Second, the committee discussed the issue of auto enrolment. While it has not made a specific recommendation on this issue, it is something that the committee is eager to explore further, to see what type of impact it would have on pension provision.

The committee also considered gender dimensions that currently exist in the pensions system and which must be considered with regard to any changes to pension provision. The committee was informed that women tend to receive pension payments that are, on average, 33% less than the amount received by men. There are several social, historical and cultural reasons for this. The commission notes in its report that women tend to spend approximately two and a half times more time on unpaid domestic and care work than men. In a submission to the committee by the National Women's Council of Ireland the legacy issues of the marriage bar were also highlighted. It is estimated that 57,000 women do not qualify for the full State pension due to the impacts of the marriage bar. The commission acknowledges in its report that the marriage bar required women to resign from their jobs once they were married and disqualified married women from applying for jobs. The committee stresses the importance of acknowledging the societal structures that have previously prevented women from participating in the workforce, which would have impacted their ability to acquire PRSI contributions.

The committee acknowledges that under the total contributions approach a homemaker's credit of 20 years is provided for those who worked in the home. However, the homemaker's credit scheme does not adequately address the inequalities in the pension system, as it was expanded on the previous scheme that excluded women who left the workforce pre-1994. The provision of the homemaker's scheme is important as it acknowledges the importance of work carried out in the home, which is primarily performed by women. These issues must be considered if we are to treat the work of all citizens equally.

The committee also considered the barriers faced by family carers when accessing the State pension. Family Carers Ireland informed the committee that one in eight people currently provide care, and that is set to increase to one in five by 2030. The majority of care is provided by women and the commission states in the report that six in ten family carers are women. While the family carers can avail of the homemaker's scheme, this does not adequately provide for those who care for periods of more than 20 years. The homemaker's scheme is also not available to those who provide lifelong care in homes, as it requires recipients to have ten years of credited contributions. The committee is of the opinion that this situation must be rectified and welcomes the commission acknowledging this in its report. The committee is of the opinion that it is necessary for the State to meet the contribution requirements for family carers to ensure that they qualify for the State pension. This is in recognition of the significant work carried out by family carers. Family Carers Ireland informed the committee that it accepts the recommendations regarding family carers made by the commission, and the committee supports it in asking that these recommendations be implemented in full.

The other cohort of people which was not specifically referenced in our report on pensions but which we had referenced in our previous report in our pre-budget submission to the Minister for Social Protection is foster care parents, where they do not accrue a PRSI record as a result of the foster care payment.

We are saying the provision being extended to family carers should also apply to foster care parents in the vital work they do in our society. I thank all Members for their attendance at this important debate. I look forward to hearing their contributions.

Josepha Madigan (Dublin Rathdown, Fine Gael)
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I very much welcome the opportunity to note and discuss the response of the Oireachtas Joint Committee on Social Protection, Community and Rural Development and the Islands to the report of the pensions commission. I note Deputy Naughten's work as Chair and the work of other members. My colleague, the Minister, Deputy Humphreys, sends her apologies. She cannot be here this evening as she is attending a number of events in Sligo throughout today and tomorrow to which she committed some time ago.

The pensions commission was established in November 2020 to examine the sustainability of the State pension system and the Social Insurance Fund in fulfilment of a programme for Government commitment. The commission was an independent body of knowledgeable and experienced academics, pension experts, members of civil society and representatives of workers and employers. The commission's report was published in October last year. It contains almost 250 pages of analysis, consideration and recommendations. It is a comprehensive report that takes account of an assessment of various analyses of population, labour force and expenditure projections, an examination of international approaches and responses to an extensive consultation process.

The commission's analyses point to the fact significant demographic changes are under way in Ireland. While Ireland enjoys a more favourable demographic position than many of our European peers, all EU member states, including Ireland, face many fiscal challenges with ageing and its associated risks. Thankfully people in Ireland are living longer and are healthier than previous generations. This is great news. However, it would be a strategic risk not to plan and provide for this change, not least in terms of income adequacy for older people.

Ireland's population is projected to increase from approximately 5 million in 2020 to approximately 6 million by 2050.Projections also point to younger age cohorts declining in relative terms by 2051 while older age cohorts will continue to grow in absolute and relative terms. Accordingly, Ireland's population is ageing. There will be a much larger proportion of older people relative to younger age cohorts. This will result in a less favourable old age dependency ratio. The number of working age people paying tax and PRSI to support State pension payments will reduce significantly. Today we have 4.5 people working for every one pensioner. By 2050 this ratio will drop to approximately two people working per pensioner.

Demographic projections are based on assumptions that may change over time. However, the results from a range of sources, including the CSO, the Irish Fiscal Advisory Council, EUROSTAT and the Department of Finance, based on different sets of scenarios and assumptions, show only marginal differences. The overall trend is that Irish people are living well beyond the current State pension age of 66. The duration of State pension payments has been increasing steadily over time. It is projected it will continue to increase further. These demographic changes drive the projected significant increases in State pension-related expenditure. In 2010, pension programme spending made up approximately 28% of the Department of Social Protection's social welfare expenditure. This proportion has steadily increased. This year, we will spend more than €9.1 billion on the State pension system. This represents 39.1% of the total social protection spend.

According to the Department of Finance's assessment, spending is projected to increase substantially over the coming years and decades given the changes occurring in Irish society. Expenditure related to State pensions is projected to significantly increase over time, more than doubling from 3.8% of GNI* in 2019 to 7.9% in 2050 and increasing further to 9.2% of GNI* by 2070. The most recent actuarial review of the Social Insurance Fund published in 2017 indicates that on a no-policy-change basis the Social Insurance Fund will have an annual deficit of €2.3 billion by 2030. This will increase to reach €13.4 billion annually by 2050. By 2045 annual expenditure on the State pension contributory alone is projected to exceed the social insurance fund or PRSI income. These are big numbers and they are only annual deficits. The actuarial review further estimated these annual deficits will compound over the intervening years, leaving the Social Insurance Fund in a cumulative deficit position of €335 billion by 2070.

The pensions commission has made it clear after very careful and detailed analysis that the State pension system is not sustainable without considerable reform and has set out a wide range of recommendations in this regard. Its recommendations for making the system fairer include linking the employment contractual retirement age to the State pension age; enhanced pension provision for long-term carers who are caring for more than 20 years; options for the introduction of early and deferred access to the State pension, including the option for a person to continue to pay PRSI contributions past the State pension age to improve their social insurance record for State pension contributory purposes; and the introduction of benchmarking or indexation of State pension payment rates.

Its recommendations to mitigate cost pressures include full transition to a total contributions approach model and phasing out the yearly average approach and increases to the State pension age, commencing much later and increasing on a more gradual basis than previously legislated for. Its recommendations to raise funding include PRSI contribution rate increases for classes A and S; broader application of PRSI on earnings irrespective of age; and an annual Exchequer contribution to the Social Insurance Fund.

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 Pension Commission's report very carefully and holistically. Therefore, the Government agreed the commission's report and recommendations would be referred to the Oireachtas Joint Committee on Social Protection, Community and Rural Development and the Islands and the Commission on Taxation and Welfare for their views. I note the Oireachtas joint committee published its 19 page report on 2 February. I thank the committee for providing its views and its work in considering the Pension Commission's report. It is clear from the committee's response that it agrees the State pension is an important element of Ireland's social protection measures. I note the committee set out some very differing views to the commission's findings, including not recommending any increase in the State pension age.

The committee's report seems to support some of the more politically palatable measures from the pensions commission, including pensions for carers and ending mandatory retirement ages, while not really engaging with the very difficult questions of how to fund pensions and how to ensure the system remains sustainable over the coming decades so young people today will have a State pension to look forward to. While the committee calls at a high level for changes in PRSI contribution rates and taxes on wealth it does not provide detail on what these actually mean, on whom they should be imposed and at what rates and what they will yield. Unfortunately, the committee does not show how these or other measures function to make the system sustainable.

The report of the pensions commission and recommendations are not anà la cartemenu. We cannot just implement the nice measures and ignore the less palatable ones. The workers and young people of today will not thank us if we shirk our responsibility to lead and to put the State pension system on a sustainable footing for future generations. There needs to be a package of measures to deal holistically with the systemic challenges facing the State pension. We cannot just cherry-pick some of the more positive parts of the Pension Commission's report for implementation and then decide to park all of the hard decisions.

The social insurance system is more than pensions alone. It would be remiss of the Government to make decisions relating to the social insurance system based on a report from the pensions commission without taking into account the views of the Commission on Taxation and Welfare, which has a broader remit. The Commission on Taxation and Welfare submitted its views on the Pension Commission's PRSI-related recommendations to the Minister for Social Protection earlier this week. The commission advised the increasing cost of the State pension is only one of a number of areas where ageing will likely lead to greater levels of public expenditure. Sustaining public services and social protection supports at the levels that Irish society expects, in combination with other demands, strongly suggests there will be a requirement to raise additional revenues through the tax system over the medium and longer term.

It is important, therefore, to see the PRSI system as part of the broader tax system.

The views of the joint committee, along with those of the Commission on Taxation and Welfare, will be considered carefully as part of the Government's deliberations over the coming weeks. All of the issues will be discussed in detail through the Cabinet committee structure. Following that, the Minister of Social Protection, Deputy Humphreys, will bring a recommended response to, and implementation plan for, the Commission on Pensions recommendations to the Government by the end of March. There are, and will continue to be, different views on the balance to be struck between cost-saving measures and revenue-raising measures. I accept the Government will have difficult choices to make, but we need to face up to the fact that reform of the State pensions system is necessary, although it is also complex. There are no easy answers and no answers that cannot be challenged. Equally, there are no answers that would find universal support. However, the State pension is extremely effective in ensuring our pensioners do not experience poverty. This Government is committed to ensuring this remains the case for current pensioners, those nearing State pension age and today's young workers, including those who are only starting out on their careers.

Dara Calleary (Mayo, Fianna Fail)
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Táim chun mo chuid ama a roinnt leis an Teachta Ó Cuív, le cead an Leas-Chathaoirligh. I welcome this debate. I welcome those who are in the Gallery, particularly the president of SIPTU, Pádraig Peyton, and Ethel Buckley. I especially welcome Mr. Peyton as he comes towards the end of his term of office. He is the one individual who has placed this issue front and centre on the political agenda. He is a Mayo man who is exiled in Sligo. He will finish his term of office at the end of this month.

I have had to shorten my contribution so I will focus on just a few matters. I commend the Chairman and the committee on this report. The Minister of State has referred to sustainability, but there are other ways to attack and manage the sustainability issue rather than completely focusing on changing the age. As the Minister of State has said, the broader tax system also includes the tax reliefs being offered on private pensions, which are worth some €2.5 billion per annum. A rebalancing of those reliefs could help when examining the broader tax system.

It was very clear during the general election campaign that the notion of raising the age was unpalatable not just to politicians but to the public generally. People who have worked incredibly hard and contributed greatly to the life of the State had an expectation of a pension at the age of 65 for many, now 66. In that context, the broader tax system and broader funding beyond the Department of Social Protection budget needs to be looked at. There are other areas involved in this.

I have noticed that while the age issue gets a lot of coverage, the issue of mandatory retirement is the one that gets most people angry and aggrieved. We need to change our approach to that and give people an option. There are many who wish to continue working and they should be allowed to do that. Yes, our age profile is changing and some people want to continue to work, but there are others who do not. We need to be proactive in reviewing that.

I particularly welcome the focus the Joint Committee on Social Protection, Community and Rural Development and the Islands put on the marriage bar. I believe this went on our entry to the European Union, which was in the year I was born. It is extraordinary it was allowed to continue. Its legacy is that 57,000 women, our mothers and grandmothers, were prevented from earning a wage and fulfilling their career potential. Given it is such a small number of people, 57,000, who are not qualifying for a full State pension not because of anything they themselves did, that issue needs to be actively looked at and dealt with once and for all.

There is still a large cohort of people who were impacted negatively by the 2012 changes with regard to home care. The home care package has not dealt with all of them. They are very aggrieved. Many of them only find out they had been penalised when they come to retirement age.

That brings me to another issue, the issue of knowledge about pensions. There are many people - in fact, most of us - who do not engage with this issue until they are coming close to pension age. The State needs to be a lot more proactive in informing people of their pension benefits. We can send out any range of taxation documentation annually. People should get an annual pension statement so they will know early on what their pension will be when they come to retirement so that they can engage with it at that stage.

I welcome the focus the committee put on the issue of family carers and other carers. In the context of what family carers save the health budget and, more importantly, the non-financial contribution they make, it is only the decent thing to do to give them pension rights. It is actually an investment in our health system as well as being the decent thing to do. That needs to be looked at as well.

I have mentioned the whole area of information for those who are paying contributions. A great many people do not know what they are entitled to in terms of PRSI benefits. We need to shine a far brighter light on that system and to make it far more accessible and transparent so that people know what they are getting for paying in. PRSI is quite a substantial portion of peoples' income and people must be given much clearer access.

Éamon Ó Cuív (Galway West, Fianna Fail)
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As somebody who was party to the writing of this report and who, along with my colleagues, put a lot of effort into it, I have to say the attitude of the establishment here in trying to rubbish us is absolutely horrendous. The Commission on Pensions did an honest job within its terms of reference, but the terms of reference were written in an attempt to get a particular result. I hope to outline why I disagree with the result. At the very end of my few minutes, I will come to why I believe the terms of reference were too narrow.

The first point I wish to raise is that I know many people, including teachers who are burnt out, care workers who have developed health issues from heavy work, people in the building trade and many other workers, who do not believe they will be in a fit physical or mental state to continue working beyond the age of 66 and who wish to retire. I have no problem with allowing those who wish to continue working - and I am one of them - to do so, but to say to people at the age of 66 that, although we know they cannot work and that they spent 40 years working, they cannot retire is incorrect.

When you read the report in detail, you will see that there are two choices. I am going to compare them. One choice, package 4, calls for 10% Exchequer funding either way. That is even-stevens. There is no difference there. Another choice, package 3, says there should be no increase in the pension age while package 4 says it should be increased to 68 incrementally over time. Where do the differences in how the money is raised arise? To make up for giving people the pension at 66, package 3 specifies that, between now and 2030, the self-employed contribution is to be increased from 4% to 10%, but package 4 specifies the exact same thing, so there is no difference there. Package 3 then specifies that, between 2030 and 2040, the self-employed contribution is to be increased by 2.8%, while package 4 specifies an increase of 2.4%, a difference of 0.4%. Package 3 specifies a further increase of 0.9% on top of that by 2050, while package 4 specifies 0.1%. Even at that rate, which would be 13.7%, the self-employed contribution would still be much better value, on an actuarial basis, than the employers' and employees' contributions put together. I have no difficulty in saying that the people on package 3 would be much better off getting the pension at 67 in light of the quite small differences I have outlined.

The other significant difference lies in the increase in employers' and employees' contributions. Package 3 specifies that this should increase by 0.2% by 2030 while package 4, the one which sets the pension age at 68, specifies no increase.

Then by 2040 it is 1.55% in package 3 and 1.35% in package 4. It then goes up by 0.9% versus 0.1% again in the last ten years up to 2050. We have two choices: to increase the PRSI contributions and give the pension at age 67 or find alternative sums. This is where I really run into trouble.

There has been no mention of auto-enrolment here. I keep tabling parliamentary questions and for some reason the Department of Social Protection does not want to give us the data. Basically auto-enrolment is coming in the next year or two, according to the Government. With auto-enrolment, the employer, the employee and the State will put money in to give the employee a pension maybe 40 years hence. The State appears to be saying that we can find all this money to put money in for 20, 30 or 40 years hence, whenever the person reaches the pension age, and that we have so much money that we can put it in now but we cannot pay the person the State pension at 66.

As someone who wants to give everybody the basic pension before starting to top up their pension, to me the bottom line is to give everybody the basic pension at 66 and then top up with whatever is left. What the Government is trying to do by subterfuge by avoiding auto-enrolment is to do it backwards. It says we are going to start to put the money in and commit to auto-enrolment first, and we are determined to increase the pension age because it suits the Government. It suits the system because it suits the private pension industry.

Claire Kerrane (Roscommon-Galway, Sinn Fein)
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I welcome those in the Gallery this evening, many of whom played a key role in what has become a major debate on pension age. The Minister of State will know that during the most recent general election, the people sent a very clear message to Government on pension age. While many of us might run a mile on hearing the word "pension", the pension age clearly matters to the public and particularly to workers. The pressure in the general election forced the Government into a significant U-turn. If the Government had its way, we would today have a pension age of 67. We would have people who spent almost every day on their feet or engaged in heavy manual labour unable to receive their State pension until the age of 67 either because they were forced out of their job due to their employment contract and onto a jobseeker's payment or because they could not remain on beyond that age.

There is an issue here. Despite the recent name change, people are being forced to retire at 65 and have to go on effectively jobseeker's payment. Earlier the Minister of State mentioned the importance of income adequacy in our social protection system and for our State pension. Once those workers move on to what is a jobseeker's payment, they lose more than €3,200 a year on what should be their State pension.

The commission's report also refers to poverty-proofing. As those 65-year-olds move on to a jobseeker's payment of €208 a week, they are on a payment that is well below the poverty line. Following the general election, the Government set up the commission which was seen at the time as avenue to make the hard decision for the Government. The commission has now done its work on which I commend it. However, it has left the Government with a decision. The Government must engage with those people who will be impacted by the decision it will make on pension age, including the trade unions. We pointed out at the time that the make-up of the pensions commission did not include a representative for older people or a representative for women. That was a mistake which is why that engagement now is important.

The commission made two important points in its report. While I appreciate the commission indicated a preference, it proposed four packages for the Government to consider, two of which do not include a State pension age increase whatsoever. The commission also recognised that some workers need to be able to access a State pension at 65, something we have said repeatedly and consistently.

Many of the proposed changes to the State pension have been about savings and also this imaginary pensions timebomb. However, nobody who appeared before the committee during its deliberations, including representatives of the ESRI, could tell us what savings would be made by increasing the State pension age. The ESRI representatives told us that because, as they put it, a de factopension is being paid at 65, it is impossible to say what savings are being made. The Government should stop peddling the argument about savings unless it actually has the figures in the first instance, which up to now it has not.

I welcome the commitment in the programme for Government for a solution for family carers. In many cases they are working extremely hard 24-7 for a basic social welfare payment and not much else. In many cases, they are denied a State pension on retirement or they are left on a reduced State pension. It is not good enough and they deserve better. I hope that matter will be resolved.

We have considerable work to do on pensions. We need to ensure that the total contributions approach works for carers and for the self-employed before it is fully rolled out. Auto-enrolment is an important add-on for workers. In many cases they depend on the State pension alone, which is not as generous as the Government likes to make out. It is it is important that we get auto-enrolment right. We need to ensure we are careful about who manages it in particular. We introduced legislation on the abolition of mandatory retirement in the previous Dáil that was passed unanimously but has not been progressed. The Government needs to stop talking about it and actually make it happen.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I welcome Pádraig Peyton and his SIPTU colleagues who are in the Gallery this evening. In 2020, politicians from all parties got a very clear message from the voters. Workers rejected the Government policy of the incremental increases in the pension age. The voters forced a fairly substantial U-turn by the Government parties and the Labour Party. Workers also want the option to continue to work on the same terms and conditions of employment. In short, workers want choice and I agree with them. Not alone was this clear at the last general election, a recent poll conducted by RED C for theBusiness Postshows that the opinion of the electorate has not changed. We need to understand that workers are up for the conversation about funding. They are not stupid and know how finances work. Workers know that pensions are not free. They do not appreciate being patronised. They understand they must pay for their pension and they want to be part of that conversation. We have one of the lowest rates of employer PRSI in the developed world. I would be interested to hear if the Government believes that this should not change and that the only change should be for workers who will be required to work while retirement gets further away from them.

Sinn Féin believes that after a lifetime of work at the age of 65, a worker should be able to retire on the full pension rate of pay. That right was abolished by the Fine Gael-Labour Party Government in 2013. We want that position reversed and replaced with a choice to access the pension rate of pay at 65 or continue to work on the same terms and conditions of employment.

Not many of us in this House will ever truly understand what a lifetime of backbreaking work does to a person's body, but we can certainly show empathy and try to understand that many workers are simply not able to continue after the age of 65. I am pleased that this has been recognised in the committee's report. Recommendation 10 provides for the right to access the pension rate of pay in limited circumstances at the age of 65. This is a very welcome development and I would be interested in the Minister of State's response. Being able to access the pension rate means they can realistically consider stopping work. For those who are waiting on tables, laying blocks, stocking shelves, cleaning or doing any other physically demanding work, that extra year would make an enormous difference.

The committee further recommends that legislation be developed to ban the use of mandatory retirement clauses in contracts and this should be backdated to include current contracts. This is essential and the good news is that Sinn Féin has legislation ready to go. We introduced it in the previous Dáil and we have sought leave to introduce it in the next few weeks.

When debating pensions and accessing the State pension, we often get bogged down in how we will fund it. This bypasses what we want to fund.

The abolition of mandatory retirement clauses is an essential part of the funding discussion, which means we have to take account of the impact this could have. If we give workers the choice to retire at 65, many will opt to work on because they want to do so and some because they have to do so. Those who can do so should be facilitated. We have to factor their contribution into any discussion we have on funding.

Likewise, the Government needs to move beyond saying it believes in a total contributions approach and actually publish what it is talking about. We need to future-proof pension provision, take account of the impact of the total contributions approach and be mindful of a recommendation of the Commission on Pensions to the effect that it supports measures which encourage economic growth and competitiveness. The Government has been shown up for having a complete lack of imagination in this regard and has overestimated the impact that raising the pension age ever upwards will have on long-term pension provision. We need to focus on the potential that the creation of a high-growth, high-wage economy could have for long-term financing of pensions. We can and should look at the collective impact of decent wages, high-value, high-growth jobs, the abolition of mandatory retirement and the total contributions approach. That is what should frame our discussions.

If she were here, I would encourage the Minister - perhaps the junior Minister, Deputy Madigan, will pass this on to her - to take on board the work of SIPTU economist Michael Taft. He has done great work on the potential in making a substantial contribution to funding pensions and future-proofing pension provision by investing in indigenous industry and ensuring that the recommendation of the pensions commission on encouraging economic growth as a mechanism for funding is put into practice. I wish to put on the record my thanks to the members of the Stop67 campaign, who have worked hard to undo the damage done by the Fine Gael-Labour Government, in particular the Labour Minister of the day, who forced workers onto the dole at the age of 65. I am glad that decision was reversed. We were told at the time the decision was taken that there was no other option but, what do you know, another option was found. I thank the secretariat and the members of the committee, in particular my colleagues, na Teachtaí Claire Kerrane and Paul Donnelly and Senator Gavan.

Catherine Connolly (Galway West, Independent)
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A Theachta Bríd Smith, are you sharing your time?

Bríd Smith (Dublin South Central, People Before Profit Alliance)
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If I have a few minutes left at the end of my contribution, I will offer them to Deputy Nash. I do not know if I will use all my time.

Catherine Connolly (Galway West, Independent)
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I will leave it to you both.

Bríd Smith (Dublin South Central, People Before Profit Alliance)
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The committee report has exposed arguments and underlying assumptions behind near hysteria over a pensions time bomb, which the report has shown to be a false narrative. Since the recession in 2008, there has been a constant clamour from economists and employers to tackle the rising cost of State pensions. We heard it from the Minister of State tonight that "this must be done", "it is a hard decision", "we have to look after the young", etc. The chief argument the Government and the economists make is that people are living longer and that, in the future, the ratio between the number of workers in the labour force and the number of retired workers will grow and become unsustainable. Words such as "burden" and "dependency" are used to convey that message. Workers living longer are a time bomb that must be defused, and the only solution is to defer pension payments from age 65 to age 68, and possibly later if needs be. The Minister of State has dismissed the committee's report, and I share Deputy Ó Cuív's anger about that.

Why do I say this is a false narrative? First, the calculation of the ratio between those of working age and those over 65 is arbitrary and misleading. We are told there are approximately 4.5 people of working age to every pensioner and that this figure is set to decrease to 3.5 by 2030 and to 2.3 by 2051. This would mean very little even if it were correct. It does not tell us how productive those who are still working are, how dependent those over 65 will be or if demographic trends are certain. That people are living longer now should be a cause for great celebration. Not only are people living longer, but those with extra years are healthier and more active than past generations have been. While they may be getting a modest State pension, many are still active and productive and providing essential labour to the benefit of wider society. In that sense they are not dependent. The ratio used does not tell us how many of those under 65 can and do work, nor does it calculate how many of those over 65 will continue to work or would choose to do so if they were allowed. The statistic is equally misleading at the other end of the equation. A modern, technology-driven economy means that workers stay in education longer than we did decades ago before joining the workforce. At the same time, many women are being forced out of the workforce because of childcare costs. Many of those over 65 continue to play vital roles in our society, even if they have formally left the workforce. Most of them will be in good health, not depending on health services or other services in the same proportion as people of their age in previous decades. For example, it is only because of retired workers, whether grandparents or other close family members, providing unpaid childcare that many families, many thousands of people, can continue to work.

Second, it is presented as a given and an insurmountable fact that the expected cost of this time bomb can be avoided only by raising the pension age. That is not the case. The commission calculated, for example, that the Social Insurance Fund deficit, the fund into which PRSI taxes go and which pays out benefits such as the State pension, could reach €13 billion in 2050 if no changes are implemented. The savings predicted from increasing the pension age to 68 are calculated at €3.8 billion for 2050. In fact, none of these are certain figures, and research shows that when the pension age was increased to 66 in 2014, it had little impact on the number of people who retired at the age of 65. The impact of forcing thousands to work longer will have unintended consequences and will not be cost-free. Childminders and volunteers in many vital sectors will have been kept at work, and that will have a knock-on effect on our society. What the economists and the Government do not publicise is the fact that raising the tax paid by employers could address any deficit. If the PRSI paid by employers were raised by just 4% or 5%, that would add another €3 billion or €4 billion to the fund, as highlighted in the committee report. That is more than the savings from raising the retirement age is predicted to yield. Workers will pay into the Social Insurance Fund throughout their entire working life. Since the last recession, they have also paid additional taxes such as USC, with little or no tangible benefits, while employers in Ireland continue to pay the lowest PRSI rates in Europe. The first step in addressing this issue is to raise that rate and to make sure that the Social Insurance Fund does not face a deficit. The Government, of course, will faint at the notion of raising taxes on employers, but then it has no problem taking the "hard decision" to slash workers' benefits or to raise the retirement age.

Third, the fact that the ratio may increase does not in itself constitute a crisis. By every measure available, worker productivity has increased enormously over recent decades. The gap between workers' productivity and their pay has also widened. In the US, for example, since the 1970s, workers' productivity has increased by a staggering 61% compared with wages, which have increased by only 17%. The difference is pocketed as profits and helps explain the widening inequality across many countries. Irish workers are the same: massive leaps in productivity over decades have gone side by side with a decreasing share of the overall wealth in society. In 1970 the share of national income for employed and self-employed people was 89% of the economy, but by 2012 that had declined to 60%. The point here is that three workers in 2030 will be as productive as five workers were in 1970 and, logically, there is no need to fear that ratio or the ability of society to support a population living longer if wealth and resources are distributed equitably and social supports are funded through taxes on wealth and profits.

As unions and workers fight against these proposed changes, the wider arguments have come under scrutiny and have been exposed. Behind the attempts to raise the pension age is a philosophy that never, ever looks to raise taxes on employers or to tax the vast wealth that workers generate as profits during their working lives. Instead, that philosophy seeks to reduce the rights and supports that workers have fought for over generations. The real agenda behind the myth of a pensions time bomb is the continuation of an ongoing war on all workers' rights and entitlements. We should not fall for this and we should defend the right to retire and bring the retirement age back to 65 as a cornerstone of a decent society.

None of what the Minister of State said is about fairness or equity; it is part of an ongoing war on pensions and retired workers. PRSI on employers is a hard decision, but the Government seems happy to tax retired workers on modest pensions or to force people to work another two years. The best of luck to members of the Government parties when they go before the electorate in 2025 on a platform of raising the retirement age to 68.

Gerald Nash (Louth, Labour)
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I thank Deputy Bríd Smith for allowing me to use some of her time. I did not realise it was a case of first-up, best-dressed. I thought the usual way we apply party slots would be operative. In any case, I thank Deputy Smith. It is much appreciated. I agree with many of the perspectives the Deputy presented and those of others here. From a workers' perspective and a broader fiscal perspective, there is no clear rationale for the kind of rises in the pension age that are planned. This is not 2012. The fiscal situation is different, as it is in Northern Ireland. I hope Sinn Féin colleagues will reflect on that and change the position in the North they voted for in 2012.

Our position in the Labour Party could not be clearer and has not changed since the general election of 2020. I have been writing since well before 2020 about the need to take a step back and reflect on this in the context of the fiscal and demographic situation. Compared to European norms, we are going faster and further in this country in terms of planned increases to the pension age than countries we like to compare ourselves to across the European Union.

I congratulate comrades and colleagues from SIPTU who have campaigned incredibly hard and well on the basis that we should STOP67. That term entered the narrative in the 2020 election. It shows the power of trade unions and organised labour and the importance of trade unions in the political and economic debate in this country. We should never lose sight of that. I congratulate them on the campaign they fought. This is a great success. It should be a turning point in relation to the Government's agenda on the pensions area.

I congratulate Deputy Naughten on a significant, rational, legible and important report in terms of influencing public debate in an informed way about the reality of pensions and demographics.

Josepha Madigan (Dublin Rathdown, Fine Gael)
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I have listened to the debate on behalf of the Minister, Deputy Humphreys, who is unavailable this evening. I assure each Deputy who has contributed that I will bring their comments to the attention of the Minister. A number of issues have been raised and I will take them all back to her.

The State pension is the bedrock of the pension system in Ireland and is extremely effective in ensuring our pensioners do not experience poverty. The CSO data for 2020 indicates that the 65-years-and-over age group had the lowest poverty rates of all age groups. This was across three poverty measurements: at risk of poverty, deprivation rate and consistent poverty. The consistent poverty rate for those aged 65 and over is 0.9%, compared to 8% for those aged 17 years and younger. Nevertheless, I take into account everything said here. I also welcome those in the Gallery and their leadership on this issue.

The public policy and social issues in funding a sustainable and adequate State pension system are complex and can often be confusing. Therefore, it is important not to lose sight of the fact that our system successfully provides a broad series of supports for older people beyond the State pension. These include other primary payments such as the non-contributory State pension and the widow's, widower's and surviving civil partner's pension. We also have targeted allowances such as the fuel allowance, the over-80 allowance, the living alone allowance and the living on a specified island allowance. Finally, we have service supports such as free travel.

In light of the ESRI research mentioned and the commitment to ensuring the carbon tax is progressive, the Government committed to a significant increase in a targeted package of social protection supports in budget 2022. These supports were selected to counteract the impact of the increased carbon tax on low income households. The measures included increases to the living alone and fuel allowances. There was a €3 increase to the living alone allowance, from €19 to €22 per week, from January of this year. This budget measure means recipients will receive an additional €156 per annum. The estimated cost of the living alone allowance increase in 2022 is €36 million and it is estimated that there will be 230,000 recipients of the payment this year. The budget provided for an increase of €5 in the weekly rate of fuel allowance, bringing the rate to €33 with effect from budget night. This benefited 398,000 households immediately with an estimated full-year cost in 2022 of just under €55.8 million.

The Government and the Minister, Deputy Humphreys, are acutely aware of the increase in consumer prices in recent months, especially the increase in fuel and other energy prices. To help mitigate the effect of these rising costs, the Government announced additional expenditure measures totalling €0.5 billion, which will make a positive impact on the incomes of all households in our country. As part of these measures, a targeted payment of €125 will be paid to all households in receipt of the fuel allowance payment, at an estimated cost of €49 million. Customers who have a weekly fuel allowance payment due the week commencing Monday, 14 March are scheduled to receive an additional €125 to their weekly fuel payment. Fuel allowance recipients who are paid a lump sum in January 2022 to cover the 2022 fuel season are also scheduled to receive an additional payment of €125 in the week commencing 14 March.

For those unable to work past 65 years of age, there is a range of supports available, including the benefit payment for 65-year-olds, which is a payment for people aged over 65 who are required to or choose to retire, without a requirement to sign-on, engage in activation measures or be available for and genuinely seeking work. This payment was designed to bridge the gap for people who retire from employment or self-employment at 65 but do not qualify for the State pension until they reach the age of 66.

The fundamental objective of the Government's policy approach to the State pension system is to ensure that it remains adequate and sustainable into the future. We all want to maintain a fair balance between those who contribute to the system and those who draw from it. The need to protect current and future pensioners while protecting the most vulnerable pensioners will remain at the forefront of any reforms in the area.

I thank Deputy Naughten and the members of the Joint Committee on Social Protection, Community and Rural Development and the Islands for their work and for providing views on the pension commission's recommendations. The views of the joint committee will be considered as part of Government deliberations in the coming weeks. Following that, the Government will bring forward a recommended response to the pension commission's recommendations by the end of March. I will bring it to the attention of the Minister, Deputy Humphreys.

Denis Naughten (Roscommon-Galway, Independent)
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It has been positive to see the joint Oireachtas committee report on pensions has created debate around the retirement age and broader issues related to pensions and the funding of them into the future. A key issue for the committee in overcoming our pension challenge over the next 50 years is the introduction of legislation banning mandatory retirement in employment contracts to apply to new contracts and, retrospectively, to current work contracts. It would give people the option to go beyond their present retirement age, if they so wish. It is the view of the committee members that it would be wrong to force people to retire at 65 and have them wait until 68 to access their pension. While some preliminary figures were available to the committee on the potential costings of providing a social welfare payment to people between their 65th birthday and accessing the State pension at 68, these could not be robustly extrapolated into costs for the State for such replacement supports.

The bigger issue is if we remove the requirement to retire at 65, many workers will continue to remain in employment.

This is not just because of the changing nature of work, especially here in Ireland, where we are moving from more manual employment to technological and even remote-based work, which allows people to continue to work longer, but also because some of the financial realities of living in Ireland today mean that people will have to work longer to be financially secure in their retirement. According to the Banking and Payments Federation Ireland, the average borrower age is now 40, with an average loan term of 22 years. The Central Bank of Ireland has highlighted in a report on household lending that almost 50% of new first-time buyer loans in the first half of 2018 had a loan term of between 30 and 34 years. These facts mean that people have little time left after clearing their mortgages to build up personal savings before they retire.

Furthermore, many more people are starting their first full-time jobs well into their 20s, which will leave them short on receiving a full contributory State pension by their 65th birthday. The committee considered a technical paper produced by the Commission on Pensions. It pointed out that "While increasing the State pension age has the greatest impact on reducing [pension] expenditure, a substantial increase in the employment rate of older workers, of 10 percentage points by 2070, would [...] reduce future expenditure". The paper points out the small difference between increasing the pension age to 68 compared with increasing the employment rate of older workers by 10 percentage points over the next 50 years. In fact, this small difference has already been addressed by the higher participation rates we have seen due to remote working during Covid-19. Surely if as much effort was put into removing the barriers to facilitating older people working longer as has been put into pushing up the retirement age, it would be within our capacity to increase the number of older people working by an average of 0.2 percentage points a year over the next 50 years.

An argument has been made that if we were to allow people to work beyond their 65th birthday, the result would be to close off promotion opportunities for younger staff in organisations. The Civil Service has overcome this challenge for senior positions by filling such posts on a seven-year basis, thus allowing new thinking and younger people to compete for such roles. There is no reason the private sector could not take a leaf out of the public sector book for a change.

The Social Insurance Fund was in surplus to the tune of some €4 billion at the end of 2019. It has gone into deficit, as we know, in the last couple of years due to payments for the Covid-19 pandemic. The Commission on Pensions, in its recommendations, stated that the pension element of the Social Insurance Fund should be put into a separate fund. These funds should be invested just like private pension funds. We already made this policy decision when we established the National Pensions Reserve Fund, NPRF. Do any of the Members remember that? It was generated from the sale of Telecom Éireann and that money was invested in the financial markets through the NPRF until it was cashed in to bail out our banks. We should put the excess corporation tax receipts into this new fund to kick-start it and put Ireland on a trajectory of a sustainable roadmap for the future of our State pension.

The point the committee has made is that we have looked not just at the tightly constrained remit the Commission on Pensions was given, but also at broader issues in this area, including increasing workforce participation rates. We are saying now that workforce participation rates will not increase to any great extent over the next 50 years. In two years, we have managed to increase workplace participation rates by 3.1% as a result of the impact of Covid-19. We did so by introducing flexible working arrangements that have facilitated more women to participate in the workforce. Equally, people from rural communities have been facilitated to obtain higher paying jobs in urban areas because they can now work remotely. We have seen a phenomenal shift in two years.

The Minister of State was across the table from me when I was arguing for the benefits of promoting remote working. Sadly, that argument fell on deaf ears at the time. We had to have a pandemic to see the difference remote working can make and is making. In two years, remote working has changed the baseline on which all the projections put forward by the Commission on Pensions were based. As I have argued today, using the current baseline and supporting older people to work beyond their 65th birthday would bring in the same amount of money as increasing the pension age to 68. Surely it makes far more sense to support older people and give them the dignity of being able to continue to work, rather than forcing them into retirement at 65 to go and draw a social welfare payment. It is wrong to tell people who have worked hard all their lives that at the end of that time, they must go and draw a social welfare payment for three years until they get their pensions. There are other options. We can support and encourage those people to continue to work. Let us, for once and for all, get rid of this archaic law that prescribes that people must retire when they reach 65.

I will be told that this cannot be done because legislation cannot be applied retrospectively. Over the last decade, we have seen that this can be done. People's pensions were reduced to deal with the financial situation we experienced. We have seen examples where things were done in the last two years that we had been told were constitutionally impossible. If the willingness is there to do it, we can bring forward this legislation. This single measure will do more to address the pension deficit we will have in the next 50 years than tinkering with any retirement age.