Written answers

Tuesday, 18 September 2018

Department of Employment Affairs and Social Protection

Pensions Reform

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry, Independent)
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743. To ask the Minister for Employment Affairs and Social Protection if she will address a matter (details supplied) regarding the gender pension pay gap; and if she will make a statement on the matter. [37358/18]

Photo of Regina DohertyRegina Doherty (Meath East, Fine Gael)
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I understand that the Gender Pension Gap referred to in the material provided by the Deputy relates to an EU Commission statistic, used to calculate the difference in all pension income, including occupational pensions and personal investment pensions. While I understand this figure was calculated as approximately 37% in 2012, the latest EU Gender Pension Gap figure (including second and third pillar pensions), amounts to 26% in Ireland. The equivalent figure across the EU is 37%, and so the Irish figure is significantly lower than the norm across Europe, rather than higher as suggested in the details supplied with the question.

It is important to note that most of this gap refers to differences in payments from occupational and private pensions as conversely, the gap between average State pension payments to men and women over 66 made by my department is currently 1%. This reflects the different dynamics of 4 state pension payments – 3 of which benefit women more than men, and one (the State pension contributory) which benefits men more than women. Changing patterns in working lives over the decades are expected to continue to see the outcomes for male and female retirees converge over time.

Another EU statistic is the gender gap among over 65s in the “At Risk of Poverty and Social Exclusion (AROPE)” indicator. This gap is 2.0% in Ireland, compared to 5.6% in the EU, and is the 4th lowest among the 28 Member States. The three countries with a lower gender gap in this measure than Ireland, all have a bigger Gender Pension Gap than we do.

As a general policy, the Government intends to introduce a Total Contributions Approach (TCA) to establishing level of entitlement for all new state pension contributory claims from 2020 onwards. Separately, I announced on 23rd January an interim TCA for those affected by the 2012 rate-band changes. Under this approach, a person who reached pension age after 1 September 2012 (i.e., who is among those affected by the new ratebands introduced from that date) and who has a 40 year record of paid and credited social insurance contributions, subject to a maximum of 20 years of credits, will qualify for a maximum contributory pension where they satisfy the other qualifying conditions for the scheme.

Up to 20 years of HomeCaring credits, and/or 10 years of other qualifying credits (e.g., when unemployed or ill) may be used, subject to the total number of credits not exceeding 20 years. This approach is expected to significantly benefit many people, particularly women, whose work history includes an extended period of time outside the paid workplace, while raising families or in a caring role. It will make it easier for pensioners assessed under the yearly average model, to qualify for a higher rate of the State Pension (contributory). This interim TCA will ensure that the totality of a person’s social insurance contributions - as opposed to the timing of them - determines a final pension outcome.

Legislation has to be drafted and enacted to enable implementation of these arrangements, and a number of options regarding the best approach to passing that legislation are being considered. In addition, an information technology system has to be developed in line with the legislation. My Department is currently working on both of these. It is planned to commence the reviews before the end of this year, with the first payments being made in the first quarter of 2019 backdated to the end of March this year.

My Department will write to the people impacted and provide them with the opportunity to have their pension calculation reviewed.

I hope this clarifies matters for the Deputy.


Monica Condron
Posted on 19 Sep 2018 10:50 pm (Report this comment)

It is quite astonishing that legislation has not yet been drafted for the Interim TCA. This was announced on the 23rd January 2018 and while there were consultations on the TCA to be introduced in 2020 there was nothing stopping preparations for the interim TCA for those affected by the budget 2012 changes as this was not going to consultation. The legislation has to be drafted, then passed before the IT system can be designed. This is all supposed to happen before 31st December 2018 so that letters can sent to those impacted about a pension calculation review. Will it even be possible to have money earmarked in Budget 2019 for the back payment to the end of March 2019 plus the subsequent 9 months of increased pensions payments due to pension recalculations under TCA. Considering Budget 2019 is to be announced in a few weeks time on October 9th this seems highly unlikely.

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