Written answers

Thursday, 30 June 2005

Department of Social and Family Affairs

Pension Provisions

8:00 pm

Photo of Olivia MitchellOlivia Mitchell (Dublin South, Fine Gael)
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Question 19: To ask the Minister for Social and Family Affairs his plans for older persons as announced on 15 June 2005; and if he will make a statement on the matter. [22916/05]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 21: To ask the Minister for Social and Family Affairs the discussions he has had with the banks regarding his recently announced proposals to encourage pensioners to remortgage to supplement their income; and if he will make a statement on the matter. [23105/05]

Photo of Trevor SargentTrevor Sargent (Dublin North, Green Party)
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Question 26: To ask the Minister for Social and Family Affairs if he will more fully explain his proposal to encourage the remortgaging of pensioner's homes. [23045/05]

Photo of Emmet StaggEmmet Stagg (Kildare North, Labour)
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Question 30: To ask the Minister for Social and Family Affairs his views on the two recent reports from the National Council on Ageing and Older People, An Age Friendly Society and Planning for an Ageing Population; and if he will make a statement on the matter. [23032/05]

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Question 78: To ask the Minister for Social and Family Affairs if he will expand on his recent statement that older persons should be able to remortgage their property to the State in return for an annual income to supplement their pension; if he plans to table formal proposals on this issue; and if he will make a statement on the matter. [23028/05]

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Labour)
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Question 87: To ask the Minister for Social and Family Affairs his new proposals to allow State pensioners to earn an income and keep their full pension; when he plans to introduce these proposals; and if he will make a statement on the matter. [23031/05]

Photo of Gerard MurphyGerard Murphy (Cork North West, Fine Gael)
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Question 89: To ask the Minister for Social and Family Affairs his views on media reports that he has plans to allow people to remortgage their property to the State in return for income to supplement their pension; and if he will make a statement on the matter. [22918/05]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 387: To ask the Minister for Social and Family Affairs the extent of the discussions he has had with banking institutions about his recent proposals to encourage banks to acquire part of the equity of their homes, having particular regard to the fact that many such people have already had to assist their sons and daughters with the purchase, who are first time home buyers; and if he will make a statement on the matter. [24153/05]

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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I propose to take Questions Nos. 19, 21, 26, 30, 78, 87, 89 and 387 together.

I recently had the pleasure of launching two important documents from the National Council of Ageing and Older People —An Age Friendly Society: A Position Document and Planning for an Ageing Population: Strategic Considerations. The concept of a society for all ages, where all generations mingle and are valued equally, is most appealing and must be the goal that we as a nation aspire to as we explore the challenges of planning for an ageing population.

I fully agree with the national council that we need to identify the values and aspirations we wish to adopt in determining the place older people will have in our society. We also need to realise that older people are a valuable asset and resource to this country and should not be seen as a burden on the State. This is particularly important as we examine policy issues relating to the future financing of long-term care. These issues raise important questions for society.

My Department carried out a consultation process on the Mercer report on the future financing of long-term care in Ireland, which involved detailed consultation with a number of organisations. The feedback from that process has been compiled and has been fed into the long-term care working group. This working group is being chaired by the Department of the Taoiseach and comprises senior officials from the Departments of Finance, Health and Children and Social and Family Affairs.

The objective of the group is to identify the policy options for a financially sustainable system of long-term care, taking account of the Mercer report, the views of the consultation that was undertaken on that report and the review of the nursing home subvention scheme by Professor Eamon O'Shea. The group will report to the Tánaiste and to me during the summer.

A range of options are being considered to fund long-term care into the future. One of these options is an equity release type mechanism. I have spoken to my Canadian counterpart about his ideas for a scheme that allows homeowners to top up incomes by mortgaging a part of their property. The amount is recouped by the State, or agency acting for the State, when the home is eventually sold. This is referred to as a "reverse mortgage". Money raised in this way can, I understand, be taken as a lump sum or can be paid in instalments as a regular stream of income over time. There may be some benefits in exploring the introduction of such a system to assist people in supplementing their pension. In Canada the aspiration is that low income older people could raise their annual incomes consistently over time. It is an option that I will explore over the coming months.

With regard to pensions, I am examining the distinction between contributory and non-contributory pensions and the possibility of adjusting the means test to see to what extent we can provide incentives to older people to remain in employment. This is part of a broader examination of pensions issues which I am undertaking and which gives rise to complex issues and fundamental questions about the way our pensions system is organised. However, I hope to come to some conclusions in this area later this year.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Question 20: To ask the Minister for Social and Family Affairs his views on the recent ESRI report on pensioners' incomes. [18323/05]

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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The recent ESRI report on pensioners' incomes and replacement rates in 2000 estimated that the income of older couples was 51% of their pre-retirement income, with single pensioners achieving a rate of 43%.

Since first taking office, the needs of older people have been a priority for this Government. We have sought, through significant increases in pensions and changes to other schemes, to improve the position of older people. Since 1997, we have increased pensions by up to €80.26 per week or 81%. Over the same period the increase in the consumer price index was 30.7% while average earnings increased by 51%.

At the same time, we have eased qualifying conditions so that more people can now receive contributory pensions. Additional household schemes have also been made available to all those over 70 years of age regardless of their income or household composition. The programme for Government contains a commitment to increase the basic State pension to €200 by 2007 and further progress will be made in the 2006-07 period. The maximum rate of contributory old age pension now stands at €179.30.

Under the national pensions policy initiative, published by the Pensions Board in 1998, the board proposed a rate of 34% of gross average industrial earnings for contributory pensions based on average earnings for the previous year. On that basis the current rate of pension is equivalent to almost 32%. A statutory review of pensions coverage and related issues is required to be completed by September 2006. In February, I asked the Pensions Board to commence work on a comprehensive review of our overall pensions strategy. Work on the review is ongoing and will include an examination of the appropriateness of the original targets suggested in the national pensions policy initiative for social welfare pensions and the total income of pensioners, taking account of the ESRI report.

I am anxious to ensure that the report is completed in the shortest possible timescale so that I can review the situation and decide what further action is required in this area. I expect to receive the report of the Pensions Board in September.

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