Patricia Ryan (Kildare South, Sinn Fein)
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124. To ask the Minister for Employment Affairs and Social Protection the estimated cost of reducing the pension age to 65 years; and if she will make a statement on the matter. [26602/22]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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It is important to note that the State Pension Age was never 65 years of age - 66 is the lowest the State Pension Age has ever been.

Reducing the State Pension Age to 65 years would increase pension related expenditure significantly.  My Department had previously estimated that changing the pension age to 65 with effect from 1/1/2021 would cost €450 million extra in the first year (2021), €845 million extra in the second year (2022), rising to over €1 billion extra in 2025, and this extra cost would continue to rise every year thereafter.  The accumulated cost differential for the period 2021-2025 was estimated to be €4.25 billion, i.e., it would cost c.€4.25 billion more than the existing system.

The estimates are for net costs and take into consideration additional increases or reductions arising in PRSI receipts, movements from other social welfare schemes, and secondary benefit entitlements including Free Travel, Fuel Allowance, Household Benefit Payment and Telephone Allowance.  The estimates were based on the rates of payments at end 2020 and did not make any provision for rate increases.  It should be noted that these costings are subject to change in the context of emerging trends and associated revisions of the estimated numbers of recipients.

In February 2021, I introduced the "Benefit Payment for 65 year olds" in line with the Programme for Government commitment, to provide a benefit payment for people who are aged 65 and who are required to retire, or who chose to retire, without a requirement to sign on, engage in activation measures or be available for and genuinely seeking work.  This new payment was designed specifically to bridge the gap for people who retire from employment or self-employment at 65 years of age but who do not qualify for the State Pension until age 66.

The Pensions Commission’s Report was published on 7th October 2021 and it contained almost 250 pages of analysis, consideration and recommendations.  The report, Technical Sub-Committee's working papers, agendas, minutes, external presentations and submissions in response to an extensive public consultation process are available on the website, pensionscommission.gov.ie.  The Commission’s work established that the current State Pension system is not sustainable into the future and that changes are needed.  It has set out a wide range of recommendations, including in respect of the State Pension Age and early access, and aligning retirement ages in employment contracts with the State Pension age. 

In the interests both of older people and future generations of older people, the Government is considering the comprehensive and far reaching recommendations in the Pensions Commission’s Report very carefully and holistically.  My officials are examining each of the recommendations and consulting across Government through the Cabinet Committee system.  The views of the Joint Committee on Social Protection, Community and Rural Development and the Islands and the Commission on Taxation and Welfare are being considered as part of these deliberations.  Once the detailed consideration of all of this in the round is complete, I intend bringing a recommended response and implementation plan to Government.  

It is clear from the Commission’s work that State Pension reform is necessary and it is complex.  It would be a strategic risk not to plan and provide for projected demographic changes, not least in terms of income adequacy for older people.  The State Pension is the bedrock of the pension system in Ireland.  It is extremely effective at ensuring that our pensioners do not experience poverty.  This Government is committed to ensuring that this remains the case for current pensioners, those nearing State Pension age and today’s young workers including those who are only starting their careers.

I trust this clarifies the matter for the Deputy.