Heather Humphreys (Cavan-Monaghan, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 793, 795 and 796 together.

The Roadmap for Social Inclusion contains a commitment to develop a benchmarking approach for use in adjusting the value of State pension payments. The approach proposed by the Department, known as the smoothed earnings approach, was subsequently endorsed by the Pensions Commission.

Government subsequently decided that the Department of Social Protection would, in submitting budget options, set out a rate of pension payment calculated using the smoothed earnings benchmark approach as an input for consideration as part of overall Budget discussions, on an annual basis.

I can confirm that this calculation was prepared and submitted to Government as part of preparations for Budget 2024. In assessing Budget options, and taking account of this calculation, Government was mindful that the cost of living pressures are most acute over the winter period. For that reason, rather than taking a simplistic approach to applying an indexed rate of increase to weekly rates of payment, the Government decided to 'front-load' supports through the provision of once-off payments, including extra payments for pensioners receiving Fuel Allowance, those in receipt of carer’s payments and those living alone.

These payments were provided in addition, not only to the €12 increase in the weekly payment rate, but to the double week payments delivered in December last and this January.

This combination of once-off payments in conjunction with the €12 weekly rate increase, not only exceeds the value of a benchmarked increase but ensures that a significant proportion of this value is delivered when people need it most over the winter period.

For example, the value of the double payments for a single pensioner is €542.60 – equivalent to over €10 per week from these two payments alone.

Pensioners living alone, and in receipt of Fuel Allowance will have received bonus payments of €500 – equivalent to a value of about a further €10 per week.

In addition, the ESRI post Budget analysis shows that the approach taken by the Government is progressive in nature and that households, including pensioner households, are better off compared to a purely indexed linked approach.

Any changes to the State Pensions, both Contributory and non-Contributory would need to be considered in an overall budgetary and policy context. The smoothed earnings calculation will be assessed in the coming months and submitted for consideration of Government as part of the preparations in advance of Budget 2025.

Heather Humphreys (Cavan-Monaghan, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Department of Social Protection provides income supports through a mixture of contributory payments (which are based on a person's social insurance record) and means-tested social assistance payments. The State Pension (Non-contributory) is a means-tested payment for people aged 66 and over, habitually residing in the State, who do not qualify for a State Pension (Contributory), or who only qualify for a reduced rate contributory pension based on their social insurance record.

The system of social assistance supports provides payments based on an income need. The means test plays a critical role in ensuring that the recipient has a verifiable income need and that resources are targeted to those who need them most.

Social welfare legislation provides that means tests take account of the income and assets of the person (and their spouse or partner, if applicable) applying for the relevant scheme. The means assessment includes income from sources such as employment, self-employment, occupational pensions and maintenance payments. It also includes property owned, other than the family home, and capital such as savings, shares, and other investments. Income earned under the rent-a-room tax relief scheme is exempt from the means test.

An applicant can have savings or assets of up to €20,000 and earnings of up to €200 per week from paid employment and still qualify for a full State Pension (Non-Contributory). The first €30 per week of means does not affect the rate of the pension. After that first €30, your pension is reduced by €2.50 for every €2.50 of means. If a person’s assessed weekly means is over €292.51, they will not be eligible to receive a State Pension (Non-Contributory) Pension.

Increasing either the income disregards for the State Pension (Non-Contributory) may have significant cost implications and would need to be considered in an overall budgetary and policy context.

I have committed to carrying out a broad review of means testing. This will include consideration of means test provisions such as income thresholds for the State Pension (Non-contributory).

I hope this clarifies the matter for the Deputy.