Olivia Mitchell (Dublin South, Fine Gael)
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Question 16: To ask the Minister for Social and Family Affairs if he is satisfied with the take-up rate of the weekly earnings disregard among non-contributory pensioners in view of the Budget 2007 changes; his views on whether this is an effective measure in encouraging people of pension age to remain at work; and if he will make a statement on the matter. [7977/07]

Séamus Brennan (Dublin South, Fianna Fail)
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In Budget 2006, I announced a wide range of important reforms for non-contributory pensioners in conjunction with the introduction of the State Pension (non-contributory).

These reforms included improvements to the means test for pensioners generally, including the raising of the weekly means disregard from €7.60 to €20. As part of the pension reforms, I also announced a specific additional disregard of €100 per week where the pensioner and/or spouse is in employment. This new disregard, relating to earnings from employment, is intended as an incentive to facilitate non-contributory pensioners who wish to continue working, or to re-enter the workforce.

The new disregard was effective from the 29th of September last year. In June 2006, all non contributory pensioners in receipt of a reduced pension who were likely beneficiaries of the disregard were notified directly by my Department of the impending introduction of the employment earnings disregard. Approximately 380 pensioners are known to have benefited from the introduction of the new employment disregard.

To further encourage State pensioners to participate in the workplace I announced, in Budget 2007, that the disregard would double, from €100 to €200 per week, effective from January 2007. The increased earnings disregard is equivalent to €10,400 a year and would allow a State Pensioner the opportunity to earn additional income through employment without effecting their full pension entitlements.

While labour force participation by people aged 55-64 years is increasing in Ireland and is the sixth highest of the twenty seven EU countries, participation by people over 65 years has been declining over many years. I would expect that the doubling of the disregard should act as a further incentive to pensioners to return or remain in the workforce. It should also help address the concerns of pensioners about reductions in pensions and benefits, along with affording them the opportunity to increase their weekly income and standard of living.

It should of course be borne in mind that the €200 disregard is relevant only to non-contributory state pensions and that over 70% of state pensioners are receiving contributory pensions. The change to the State Pension (Non Contributory) employment earnings disregard should not only be seen as society's recognition of the contribution our older people have made to the building of modern Ireland, but also sends out the message that we value the potential contribution that these men and women can make to society.

While it is not yet clear how successful this initiative will be in increasing labour market participation by older people, the early signs are encouraging and I am optimistic about the prospects for the future.