John Brady (Wicklow, Sinn Fein)
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608. To ask the Minister for Employment Affairs and Social Protection the areas that will be examined for possible changes to or restructuring of PRSI contributions with a view to manage and finance State pensions into the future as per the newly published Roadmap for Pensions Reform; and if she will make a statement on the matter. [11671/18]

Regina Doherty (Meath East, Fine Gael)
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The Roadmap for Pensions Reform 2018-2023 confirms Government’s position that the State pension will be reformed and will remain as the fundamental basis of the pension system in Ireland. To do this, the Government will introduce from 2020 ‘Total Contributions Approach’ (TCA) for the State Pension (Contributory). The TCA is advanced as a more logical and transparent system, where the individual’s lifetime contribution will more closely match the benefit received.

The Roadmap also confirms that State pension payments will be formally benchmarked at 34% of average earnings and that future increases will be linked to the consumer price index and average wages. Taken together, these measures will provide greater confidence regarding pension value over the long term. The changes proposed in this Roadmap will enable people to plan with confidence for their retirement and be assured that the adequacy of their State pension will be protected over time. They will also introduce greater equity into the State pension system.

However the changes can only be implemented and the necessary assurances as to the maintenance of pension adequacy provided, if there is a similar level of assurance as to the funding of the system. In other words, that social insurance contribution rates will be adjusted to ensure that there are sufficient funds available to Government to finance the payment of pensions.

Therefore, in order to bring greater certainty to the funding of the Social Insurance Fund, the Roadmap proposes the establishment of a transparent actuarial basis for the setting of Social Insurance contribution rates and commits to the publication of a consultation paper in this regard. This process will be informed by the recently published Actuarial Review of the Social Insurance Fund which will itself play an important role in informing overall debate on policy developments in relation to the SIF in the years ahead. This includes the financial sustainability of the Fund given the expected demographic challenges and consideration of extending the scope of benefits for workers generally, including the self-employed. This will provide Government with a timely and evidence-led opportunity to undertake a full review of our social insurance system and to consult with stakeholders.

I trust this clarifies the matter for the Deputy.

John Brady (Wicklow, Sinn Fein)
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609. To ask the Minister for Employment Affairs and Social Protection the protections that will be in place to ensure that poverty is avoided for those in receipt of the State pension (non contributory) in view of the plans detailed in the Roadmap for Pensions Reform to link the State pension (contributory) amount to the consumer price index and wage levels; and if she will make a statement on the matter. [11672/18]

Regina Doherty (Meath East, Fine Gael)
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The Roadmap for Pensions Reform commits the Government to examine and develop proposals this year, to set a formal benchmark of 34% of average earnings for the State pension (contributory). These proposals when developed later this year will also set out what this will mean, in practical terms, for those in receipt of the State pension (non-contributory). I can assure the Deputy, however, that the rate of the non-contributory pension will be at least maintained, in real terms, for the duration of this Government, as set out in the Programme for Government.

Last year, a person solely dependent upon State pension (non-contributory) pension and in receipt of full secondary benefits, already received pension payments above the 34% benchmark. The €5 increase later this month will bring the weekly rate to €232 (95.36% of the maximum rate of the contributory pension), with allowances and secondary benefits also available where applicable, including Fuel Allowance, Household Benefits, Living Alone Allowance, Telephone Support Allowance and Over-80 Allowances.

Current poverty rates for people over 66 are much lower than among the general population, with approximately half as many at risk of poverty (8.77%), and less than a fifth as many (1.56%) experiencing consistent poverty. This is a direct result of the success of the Government in defending the core rates of pension payments during the downturn, and the subsequent increases now that the economy has been revitalised.

I hope this clarifies the matter for the Deputy.

John Brady (Wicklow, Sinn Fein)
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610. To ask the Minister for Employment Affairs and Social Protection the way in which the 40 years social insurance contributions needed to receive a full State pension was arrived at for the new total contributions approach as detailed in the Roadmap for Pensions Reform; and if she will make a statement on the matter. [11673/18]

Regina Doherty (Meath East, Fine Gael)
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The Roadmap for Pensions Reform 2018-2023 sets out how we intend to implement the Total Contributions Approach (TCA) to calculating entitlement to the State pension (contributory) from 2020 onwards. Subject to finalisation of the scheme design following a public consultation, it is intended that the TCA will offer a full State pension to all people with a full record of 40 years social insurance contributions with pro-rata payments for people with less than 40 years of contributions. People who have to take time out of the workforce to take up caring duties will be eligible to accumulate up to 20 years credits towards meeting the full 40 year contribution record. Similarly, unemployed people and others with an entitlement will, as now, be able to get credited contributions provided that they have a minimum number of paid contributions.

The model proposed in the National Pensions Framework in 2010 required 30 years of contributions, but had a cap of 10 years for credits, including Homemakers credits. It also did not recognise home-making periods before 1994. These factors meant that such a model would be disadvantageous to women who had significant periods outside the workforce raising children.

The 40 year proposal allows for 20 years of credits, including HomeCaring Credits and crucially, removes the limitation on these HomeCaring periods before 1994 that was included in the 2010 plan. The current proposal is far more gender balanced, and supports our policy of making the State pension adequate, sustainable and equitable. A former home-maker can qualify for a maximum rate pension with only 20 years contributions under this system. It also allows a person qualify for a maximum rate pension with 30 years of paid contributions and 10 years of ordinary credits, even if they had no home-making periods over the course of the 50 years between age 16 and state pension age.

I hope this clarifies the matter for the Deputy.

John Brady (Wicklow, Sinn Fein)
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611. To ask the Minister for Employment Affairs and Social Protection the reason the cost of tax reliefs on private pensions was not examined in the Roadmap for Pensions Reform; if this means that tax reliefs will continue for those that need them least; her views on whether this is worthwhile expenditure; and if she will make a statement on the matter. [11674/18]

Regina Doherty (Meath East, Fine Gael)
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Let me begin by clarifying that policy with regard to tax relief on private pensions is a matter for the Minister for Finance. However, I can say that I am in favour of financially incentivising retirement savings to help address a situation where the proportion of employees in Ireland with supplementary pension cover is far too low at just 35% of the private sector workforce. This suggests that a high percentage of the working population is not saving enough, or is not saving at all, for retirement.

Tax relief is a significant cost to the State but the benefits of tax relief are not at all well understood and many have little or no understanding of how the tax system impacts pension contributions. This is why in launching the new Automatic Enrolment system detailed in the Roadmap for Pensions Reform, to incentivise participation and mitigate the risk of member opt-out, the Government believes that any financial incentives must be effectively communicated, easily understood and appreciated.

To enhance the potential for the success of the automatic enrolment system, any State provided financial incentives should strive to give relief in a manner that supports low to middle income earners and be sufficiently attractive to encourage such earners to participate. Incentives should also avoid complexity and be as transparent as possible.

I can confirm that the Roadmap commits to a review of the cost of funded supplementary pensions to the Exchequer. This will inform decisions relating to financial incentives for retirement savings and underpin the development of an automatic enrolment system. It will include an assessment of the economic and social benefits delivered and an evaluation of equity in the distribution of tax expenditure on pensions.

The Roadmap also confirms that an Interdepartmental Pensions Reform and Taxation Group (chaired by the Department of Finance) will identity and progress measures to improve the harmonisation of rules to eliminate anomalies in the treatment of different retirement arrangements including taxation treatment.

I hope this clarifies the matter for the Deputy.

John Brady (Wicklow, Sinn Fein)
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612. To ask the Minister for Employment Affairs and Social Protection the way in which her Department along with other Departments will determine whether or not there is improved flexibility for workers when it comes to remaining at work beyond the traditional retirement age; the way in which this will be kept under review as stated in the Roadmap for Pensions Reform; and if she will make a statement on the matter. [11675/18]

Regina Doherty (Meath East, Fine Gael)
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The Government believes that as we live longer and healthier lives many people wish to, and can, continue to work to an older age and make a positive contribution through their work to our society. Accordingly The Roadmap for Pensions Reform details a range of measures intended to support a positive ageing environment, where older people are, to the greatest extent possible, encouraged, and facilitated in working, if they wish to, beyond the ‘normal’ retirement age.

Ireland does not have a default age at which employees must retire and the setting of retirement age remains a matter for agreement between employers/employees and the employment contract. The Government recognises that measures which may support longer working include encouraging employers to more closely consider the logic of, and justification for, mandatory retirement ages in employment contracts.

Employers/employees and their representatives had indicated difficulty in interpreting and engaging on matters relating to retirement age in the absence of an overarching guidance or framework. In response to these concerns, the Workplace Relations Commission has recently published a ‘Code of Practice on Longer Working’. The code informs best practice in managing the engagement between employers and employees in the run up to retirement, including requests to work beyond what would be the normal retirement age in the employment concerned. Following publication of this code, the Irish Human Rights and Equality Commission will prepare and publish further guidance material for employers on the use of fixed-term contracts beyond normal retirement age.

The Government expects that these and other provisions will combine to result in greater employee flexibility to work beyond what may be considered the traditional retirement age of 65. To ensure this is the case, the Roadmap confirms that employment practices in this area will be kept under close review in the near term. This will include engaging with employer and employee representatives and monitoring the labour market more generally to observe changing employment practices.

As the Roadmap makes clear, should it appear that these provisions are not resulting in improved flexibility for workers, the Government will examine and consider the merits of restricting the capacity to use mandatory retirement provisions relative to the State pension age.

I hope this clarifies the matter for the Deputy.