Ruairi Ó Murchú (Louth, Sinn Fein)
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98. To ask the Minister for Employment Affairs and Social Protection to report on the progress made regarding benchmarking the State pension at 34% above average earnings, considering the budget 2024 increase in State pensions has not matched the spending power of State pensions from 2020. [54102/23]

Ruairi Ó Murchú (Louth, Sinn Fein)
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Will the Minister report on progress made on benchmarking the State pension at 34% of gross average earnings, considering the budget 2024 increase in State pensions has not matched the spending power of the State pensions when the determination was made for 2020 or 2021?

Joe O'Brien (Dublin Fingal, Green Party)
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The roadmap for social inclusion contains a commitment to develop a benchmarking approach for use in adjusting the value of State pension payments. The approach proposed by the Department, known as the smoothed earnings approach, was subsequently endorsed by the Pensions Commission. I am pleased to say that the Government subsequently agreed the Department of Social Protection would, in submitting budget options, set out the rate of pension payment using the smoothed earnings benchmark approach, and can confirm that this calculation was prepared and submitted to Government as an input into budget preparations.

Taking account of this benchmark in assessing the options open to it the Government was mindful, as it was last year, that the cost-of-living pressures were most acute over the winter period. For that reason, and rather than take a simplistic approach to applying an indexed rate of increase to weekly rates of payment, the Government decided to front-load supports through the provision of special payments including extra fuel allowance, working family payment, child benefit, carer's allowance, disability allowance, qualified child and living alone payments. These payments are in addition not only to the €12 increase in the weekly payment rate, but to the Christmas bonus payments being made this week and extra double week payments being made in January. This combination of special payments plus a weekly rate increase, not only exceeds the value of a benchmarked increase, but ensures a significant proportion of this value is delivered when people need it most - over the winter period.

The double payment to be made in January, for example, will have a value for a single pensioner of €277.30, equivalent to more than €5 per week - as does the double payment to be made this week. That is more than €10 per week in value from these two payments alone. Pensioners living alone, and in receipt of fuel allowance, will have received bonus payments of €500 - equivalent to approximately a further €10 per week. The measures taken by the Government therefore meet, and in fact exceed, any increase calculated under the smoothed earnings benchmark. In addition, ESRI post-budget analysis shows that the approach taken by the Government is progressive in nature and that households, including pensioner households, are better off compared to a purely index-linked approach. Its analysis also showed that the approach taken benefited low-income households the most and reduced their risk of poverty.

Ruairi Ó Murchú (Louth, Sinn Fein)
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My understanding is that the smoothed earnings benchmark was provided as an input, but other determinant factors were taken into account. We all accept those extra payments are obviously welcome. However, the Pensions Commission and the technical subcommittee sat and made a determination on the 34% of average gross earnings. There was a reason for that. We have had conversations here about how farcical it gets, not only on pensions but all social protection payments, in particular at budget time. We almost get into a game of one-upmanship about who proposed a fiver more, €12, €20, €25 or sometimes unfortunately a lot less. We have called for a social welfare adequacy commission or something where we could just get down to indexing and take the politics and the sting out of it. We could take it out of this Chamber and provide people with what they need.

Joe O'Brien (Dublin Fingal, Green Party)
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I agree with the Deputy's sentiments, and I support the benchmarking approach. I will give a little detail on it. The Government decision specified that calculation be submitted to Government as an input to its deliberations. This is because it is important the Government retains the ability to explore various options based on prevailing circumstances. In the case of the budgets in 2023 and 2024, the Government decided it was preferable to front-load the payments in order that people would have money when they most needed it, rather than spread over 52 weeks. As the ESRI analysis shows, this delivers more value to people dependent on welfare. It should also be noted that the detail of how the smooth earnings benchmark is calculated has been set out in the roadmap for social inclusion, and the data used in the calculation is also available on the CSO website. The rate, calculated by the Department using the smoothed earnings method, indicated that an increase of €20 in the weekly payment rate would be required to maintain the relative value of the State pension. As I also said in my initial contribution, the ultimate value of what people got from the measures in the budget superseded that amount.

Ruairi Ó Murchú (Louth, Sinn Fein)
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I understand the argument but I will put it back on the record that if we are talking about benchmarking then we need to get serious about it. We cannot always consider one-off payments. I understand why at times there is a need for an element of flexibility in setting budgets. However, we need to look at the idea of something that provides adequacy of payments. If we come up with figures on benchmarking based on what was best practice, with a considerable amount of due diligence done by a large number of officials on this 34% of gross average earnings, then we have to take it seriously. Again, I state that a social welfare adequacy commission is the way to go. I also put on the record, as I will hardly get to the question, that I brought up with the Minister delays around the processing time for disability payments and allowance applications. We need to look at that, and I will send the Minister of State something in writing on it.

Joe O'Brien (Dublin Fingal, Green Party)
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I will take the Deputy's point about the delays in processing disability payments back to the Minister. This is the first budget with benchmarking even in the mix. There is a stronger role for it going forward to ensure adequacy. We continue to see social transfers play significant impacts on reducing poverty and income inequality. Ireland remains one of the most effective countries in the EU in this regard. The at-risk of poverty rate before social transfers was 36% in 2022. This reduced to 13% after transfers were included. That represents an overall poverty reduction effect of 64%. An independent post-budget analysis from the ESRI further found that the package of measures introduced under the budget ensures there are gains in disposable income for all household types, with lone parents and pensioners living alone recording the largest proportional increases. I welcome the first budget where we have used benchmarking as an input. I would like to see it as a bigger part of the discussion in future budgets as well.