Written answers

Tuesday, 17 May 2022

Department of Employment Affairs and Social Protection

Social Welfare Payments

Photo of Aindrias MoynihanAindrias Moynihan (Cork North West, Fianna Fail)
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507. To ask the Minister for Employment Affairs and Social Protection if she has considered index linking social protection payments in view of the fact that both Brexit and the war in Ukraine are projected to compound existing inflationary pressures from Covid-19 and the disruption of supply chains; and if she will make a statement on the matter. [21439/22]

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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536. To ask the Minister for Employment Affairs and Social Protection her views on the call by an organisation (details supplied) to benchmark core social welfare rates to 27.5% of average weekly earnings. [24942/22]

Photo of Heather HumphreysHeather Humphreys (Cavan-Monaghan, Fine Gael)
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I propose to take Questions Nos. 507 and 536 together.

A number of studies in recent years have considered the indexation of various categories of social protection payments.

Following publication of the Roadmap for Pensions Reform in 2018, which included a recommendation to benchmark and index State Pension rates, my Department undertook a consultation process in 2019 with interested stakeholders to hear views on possible approaches to the indexation of pensions, and social welfare rates more generally. This process also included discussion with representatives of the community and voluntary sector at the Pre-Budget Forum in July 2019, as well as at bilateral meetings with stakeholders.

The outcome of these discussions was considered, and in consultation with the Department of Public Expenditure and Reform, the Department has developed proposals for setting a formal benchmark for State Pension Contributory payments and the indexation of future changes in pension rates of payment.

The approach developed, known as the “smoothed earnings” approach, aims to ensure that the relative value of welfare payments compared to market earnings would be maintained over time and that, in the short-term, the real value, or purchasing power, of these payments would be protected.

This commitment was reiterated in the Roadmap for Social Inclusion which also outlined a potential approach for benchmarking and indexing pension rates.

Finally, the Pensions Commission report also examined the issue of benchmarking pension rates and has endorsed implementation of the “smoothed earnings” approach. The recommendations of the Pensions Commission are being considered.

My Department has also committed to examining a benchmarking and indexation approach for working age payments.

I am acutely aware of the increase in consumer prices in recent months, especially the increase in fuel and other energy prices.

In response the Government acted early to address these challenges. To help mitigate the effects of these rising costs, the Government announced a package of measures in February, which will have a positive impact on the incomes of all households in our country.

This package included a lump sum of €125 to all households in receipt of the Fuel Allowance payment, which was paid to social welfare recipients in March. This week, a further lump sum payment of €100 will be paid to these households.

Taken together with the €5 increase in Fuel Allowance introduced as part of Budget 2022, this means that low-income households will see an increase of 55% in Fuel Allowance support provided during this Fuel season compared to last season. In conjunction with the electricity costs emergency benefit payment, such households will receive over €600 in additional energy supports this year. The Deputy will also be aware of the measures taken by the Minister for Finance to reduce duties on fuel and retain the low level of VAT on hospitality services. The Minister for Transport has also reduced public transport fares by 20%.

These measures are in addition to others introduced as part of Budget 2022 - including the largest social welfare budget package in 14 years - and are more expansive than measures introduced in most other countries.

The Government will continue to monitor this situation closely.


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