Brendan Howlin (Wexford, Labour)
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225. To ask the Minister for Employment Affairs and Social Protection the once-off and the estimated 2018 cost of returning to the PRSI contribution schedule for qualification to the contributory old age pension that existed pre 2012; and if she will make a statement on the matter. [40035/17]

Regina Doherty (Meath East, Fine Gael)
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As a result of more people living to pension age and living longer in retirement the number of State pension recipients is increasing year on year. This has significant implications for the future costs of State pension provision. This demographic change alone is expected to increase spending on pensions by over €220 million this year – not including the impact of rate increases.

A number of significant reforms to State pensions were introduced in recent years which have allowed my Department maintain the value of the State pension, and indeed increase it in the last two Budgets. With effect from April 2012, the number of paid contributions required to qualify for a State Pension (contributory), or SPC, increased from 260 paid contributions to 520 paid contributions. At the time this measure was introduced, the annual exchequer savings were expected to be in the region of €6m per annum but rising substantially in the long term. Therefore, the cost of reverting now would be significantly higher. However, as people with 260-519 paid contributions no longer make claims to SPC, the data is not available to update this costing.

The current rate bands applying to the SPC were introduced from September 2012, replacing previous rates introduced in 2000. These rate bands more closely reflect the social insurance contributions history of a person than those in place between 2000 and 2012.

It is estimated that to revert to the previous bands from January 2018 would result in an annual cost of over €60 million in 2018, and this annual cost would increase by an estimated €10 million each following year (e.g. it would be expected to cost some €70 million in 2019). This estimate reflects the numbers of those in receipt of reduced rate SPC payments, and does not include those who are claiming an alternative payment at a higher rate than their reduced SPC entitlement, and who might qualify for a higher rate of SPC if such a change were introduced. This estimate also assumes that any such change to rate bands would generally be implemented from a current date and as a result not generate retrospective arrears.

The main beneficiaries from such a decision would be younger (post 2012) pensioners who both:

(a) haven’t sufficient paid contributions into the Social Insurance Fund to qualify for a contributory pension at the maximum rate, or for the 98% rate applying to those with a yearly average of 40-47 weekly PRSI contributions paid or credited per year, and

(b) do not qualify for means-tested pension payments at the maximum rate because, in addition to their state pension, they also have means above a certain level (e.g. they are in receipt of an occupational pension and/or own a second residential property).

The savings created by the new rate bands were an alternative to cutting the core rate of pensions, at a time when Exchequer savings were required, and other social protection payments were being reduced across the board. Had a similar approach been taken with pensions, affecting everyone over State pension age – regardless of their means and their contribution record – the hardest hit would have been pensioners with no additional incomes, notably those paid a State pension (non-contributory), and widows and widowers living alone on one pension payment. A very significantly higher proportion of such pensioners are women, and this would have been expected to result in more women over 65 experiencing consistent poverty, relative to men.

The alternative approach, taken by the Government at that time, made savings in respect of the State pension (contributory) by making rates of payment for new pensioners more reflective of contribution history, while maintaining the rates of payment for non-contributory and Widows/widowers pensions, as well as for contributory pensions paid to those who had contributed into the Social Insurance Fund throughout their working lives (i.e. with a yearly average of 40 or more). This approach safeguarded those most vulnerable pensioners, whilst avoiding undermining the contributory system, which is the basis for collection of PRSI, which funds the SPC on a ‘Pay-As-You-Go’ basis.

Where people do not qualify for a maximum-rate contributory pension in their own right, the social protection system provides alternative methods of supporting such pensioners in old age. Where their spouse has a contributory pension, they may qualify for an Increase for a Qualified Adult amounting up to 90% of a full rate pension, which by default is paid directly to them, and is subject to a personal means-test. Alternatively, they may qualify for a means-tested State Pension (non-contributory), based on their household means, amounting up to 95% of the maximum contributory pension rate. There are very significant income and capital disregards in these means tests, which result in the large majority being paid at the maximum rate.

I hope this clarifies the matter for the Deputy.

Brendan Howlin (Wexford, Labour)
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226. To ask the Minister for Employment Affairs and Social Protection the estimated cost in 2018 of increasing rent supplement limits to reflect market rents; the cost of an increase that would be required to capture the 35th percentile and the 50th percentile of the market; and if she will make a statement on the matter. [40036/17]

Regina Doherty (Meath East, Fine Gael)
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Rent supplement plays a vital role in housing families and individuals, with the scheme currently supporting 38,600 recipients at a cost of €253 million in 2017.

The Department carried out a review of the rent limits in 2016 with the commitments contained in the Programme for a Partnership Government and increased limits were introduced in all areas of the country with effect from 1 July 2016. The review process represented a realignment of the maximum rent limits with agreed rents, with rents generally benchmarked against the 35th percentile of those registered with the Residential Tenancies Board. The review’s methodology is evidenced based and reflects the pressures on rental properties in each location.

The information requested by the Deputy, the estimated cost to increase rent limits to market rents at the 35th percentile and the 50th percentile for 2018, is not available.

The rent supplement scheme is being administered to take account of the on-going rental market difficulties through the implementation of a targeted case-by-case approach that allows for flexibility where landlords seek rents in excess of the rent limits. In addition, a Protocol arrangement is in place with Threshold and is operational in the areas where supply issues are particularly acute covering Kildare, Dublin, Cork, Meath, Wicklow and Galway City. For 2017 to date, some of 1,400 recipients have been supported with increased rent payments above the rent limits.

As the Deputy will be aware the strategic policy direction of my Department is to return rent supplement to its original purpose of being a short-term income support with the introduction of the HAP scheme. Any further review of prescribed rent limits would have to be considered in a budgetary context and in conjunction with my colleague, the Minister for Housing, Planning and Local Government.

I trust this clarifies matters for the Deputy.

Brendan Howlin (Wexford, Labour)
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227. To ask the Minister for Employment Affairs and Social Protection the estimated cost of increasing the back to school clothing and footwear allowance by €50 for each category for 2018; and if she will make a statement on the matter. [40037/17]

Regina Doherty (Meath East, Fine Gael)
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The back to school clothing and footwear allowance scheme provides a once-off payment to eligible families to assist with the costs of clothing and footwear when children start or return to school each autumn.

The rates of the payment for the 2017 scheme were increased from €100 to €125 for children aged 4 to 11 and from €200 to €250 for children aged 12 years and over. This brings the total allocation for the allowance this year to €47.4 million, an increase of €10 million on what was originally proposed for 2017.

The annual cost to increase the payments by €50, from the recently announced 2017 rates to €175 and €300, would be €14.1 million over and above the €47.4 million now allocated to the scheme for 2017.

Any further changes to the rates of the allowance would have to be considered within a budgetary context and the scope of the overall resources available for welfare improvements.

I trust this clarifies the matter for the Deputy.

Brendan Howlin (Wexford, Labour)
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228. To ask the Minister for Employment Affairs and Social Protection the estimated cost of expanding child benefit to parents with children who are 18 years of age or older but remain in second level education for 2018; the cost for a full year; and if she will make a statement on the matter. [40038/17]

Regina Doherty (Meath East, Fine Gael)
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Child Benefit is a monthly payment made to families with children in respect of all qualified children up to the age of 16 years. The payment continues to be paid in respect of children up to their 18th birthday who are in full-time education, or who have a disability. Child Benefit is currently paid to around 619,880 families in respect of some 1.2 million children, with an estimated expenditure of over €2 billion in 2017.

The current estimated cost of expanding child benefit to parents with children that are 18 years of age or older but remain in second level education for 2018 based on figures from the Department of Education and Skills for 2016 which show 58,653 individuals 18 years of age and over in second level education. The estimated annual cost based on the current Child Benefit rate of €140 per month is approximately €98.5 million in a full year.

Budget 2009 reduced the age for eligibility for Child Benefit from 19 years to less than 18 years. A value for money review of child income supports, published by the Department of Social Protection in 2010, found that the participation pattern of children in education supports the current age limit for Child Benefit.

Given the universality of Child Benefit, allowing for it to be paid in respect of 18 year olds still in full time education would not be a targeted approach. The adoption of such a proposal has significant cost implications and would have to be considered in an overall budgetary context.

Families on low incomes can avail of a number of provisions to social welfare schemes that support children in full-time education until the age of 22, including:

- Increase for a Qualified Child (IQCs) with primary social welfare payments;

- Family Income Supplement (FIS) for low-paid employees with children;

- The Back to School Clothing and Footwear Allowance for low income families (paid at the full-time second level education rate).

These schemes provide targeted assistance that is directly linked with household income and thereby supports low-income families with older children participating in full-time education.