John Brady (Wicklow, Sinn Fein)
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538. To ask the Minister for Social Protection the estimated net cost in respect of social welfare spending of reinstating the State pension transition payment in 2018 to 2022 respectively, assuming the scheme will be extended to cover persons aged 66 from 2021 should the pension age increase to 67 years of age. [19581/17]

John Brady (Wicklow, Sinn Fein)
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539. To ask the Minister for Social Protection the estimated net cost in respect of social welfare spending of reinstating the State pension transition payment in 2018 to 2022 respectively, assuming no change in pension age to 67 years of age in 2021. [19582/17]

Leo Varadkar (Dublin West, Fine Gael)
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I propose to take Questions Nos. 538 and 539 together.

The Social Welfare and Pensions Act 2011 provided that State pension age would be increased gradually (over a 14 year period) to 68 years. This process began in January 2014 with the abolition of the State pension transition (SPT) which was available at age 65 for those who satisfied the qualifying conditions. This change standardised State pension age for all at 66 years. This will increase to 67 in 2021 and to 68 in 2028.

The cost of the SPT in 2013 (the last full year of its operation) was €137 million. A detailed estimate was carried out last year by my Department of the net cost of re-introducing the SPT. This cost was based on the costs involved at the time of the abolition of the SPT and used population projection data for the coming years. Based on those estimates but adjusting for the costs of the increases in the weekly rates of pensions in 2016 and 2017, these costs have been revised as follows:

This revised costing do not take account of:

- The costs of any potential increases in the weekly rates of pensions or payment of a Christmas Bonus over the period;

- The incidence, if any, of higher labour force participation by 65 year olds in the years in question.

- The impact of increases in State pension age, scheduled for 2021 and 2028

Social welfare legislation requires that an Actuarial Review of the Social Insurance Fund (SIF) be carried out every five years. Such a Review is currently underway with the Report required to be laid before the Houses of the Oireachtas in mid-August next. The Review will examine the “health” of the SIF including projecting income and expenditure of the SIF over the period out to 2071. An important component of this work will be quantifying the impact of the changes in the pension age in 2021 and 2028 based on the most up to date demographic and economic projections. This information, when available, will assist the Department to estimate (1) the cost of extending entitlement to the SPT to age 66 in 2021 and 2022 and (2) to estimate the cost of SPT in 2021 and 2022 if there was no change in the pension age in 2021 as requested by the Deputy. It should be noted that both such approaches would involve very significant costs to the SIF.

I hope this clarifies the matter for the Deputy.