Richard Bruton (Dublin Bay North, Fine Gael)
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1028.To ask the Minister for Employment Affairs and Social Protection if the option to work beyond the age of 66 years is now available; the level of take-up that has been recorded to date; if she has evaluated whether the incentive in terms of pension uplift and additional contributions earned is actuarially fair to the person deferring pension payment; and if she will make a statement on the matter.[35834/24]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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In 2023, I introduced legislation for a series of landmark reforms to the State Pension system in response to the recommendations from the Pensions Commission. This set of measures represented the biggest ever structural reform of the Irish State Pension system.

One of the key measures under these reforms, which came into operation from the 1st January 2024, is the introduction of a flexible pension system in Ireland where a person can access the State Pension (Contributory) at any point between age 66 and 70. It is important to note that there has never been a mandatory retirement age in Ireland. Individuals have always been able to work past their 66^th birthday, if in agreement with their employer.

A claimant can now on applying for State Pension (contributory) select a date in the future for drawing it down. However, if circumstances change for that claimant after they submit their application, then they can change this date and drawdown immediately once they are over 66 years of age.

It is important to note that those entitled to claim SPC do not need to notify the Department of their intention to defer. Not applying for SPC will automatically mean the person is in deferment. As a consequence, my Department does not have a record of all those who choose to defer. As the legislation to provide for deferment took effect in January 2024, the picture in terms of the number of people choosing to defer will become clearer in 2025 and subsequent years as people choose to apply at later ages as they reach 67, 68, etc.

Where a person defers drawing down their State Pension (Contributory) they can choose whether to continue working or not. They may have already reached the maximum number of contributions required for a maximum rate pension and therefore decide not to work. If they continue to work, they will continue to pay PRSI contributions. If they have not already reached the number of contributions for a maximum rate pension, they can continue to increase their contribution record.

A person may also continue to work in order to meet the 520 contributions qualifying criteria for State Pension (Contributory) or to increase the total number of contributions for calculation of an enhanced rate of State Pension (Contributory).

The levels of uplift applicable for those deferring drawdown of State Pension (Contributory) were actuarially set so as to be cost-neutral to the Social Insurance Fund. Under these uplifts, the long-term value of pension payments from the Social Insurance Fund earned at State Pension Age should be equivalent regardless of the age at which entitlements are accessed.

Based on the January 2024 rate of State Pension (contributory) of €277.30, the maximum rates for each year of deferral in 2024 are:

• €290.30 at age 67
• €304.80 at age 68
• €320.30 at age 69 and
• €337.20 at age 70.

I trust this clarifies the matter for the Deputy.

Richard Bruton (Dublin Bay North, Fine Gael)
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1029.To ask the Minister for Employment Affairs and Social Protection the start date for the phased introduction of the total contributions regime for pensions; and if it is envisaged that there will be any winners or any losers during the transition.[35836/24]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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At present the State Pension (Contributory) can be calculated under two different methods known as the Total Contributions Approach (TCA) and the Yearly Average (YA) approach.

Following on from the Pensions Commission's recommendations, a number of State pension reforms were enacted in the Social Welfare (Miscellaneous Provisions) Act 2023 on the 14th December 2023, which represent the biggest ever structural reform of the Irish State pension system.

Among these reforms, the 2023 Act introduced a ten-year phased transition from the YA method of calculation of State Pension (Contributory) to TCA as the sole method of calculation. TCA is a fairer and more transparent method for calculating the contributory pension and will remove the existing anomalies that exist in the YA calculation method. The ten-year transitional arrangements are to avoid a ‘cliff edge’ effect. The first year of phasing-out will begin in January 2025. From 2034 the YA method of calculation will no longer be used, and all State Pension (Contributory) calculations will be done using the TCA method.

Last year, the Department commissioned the ESRI to do an analysis, considering the impact of the move to TCA for State Pension (Contributory) and its report was published on the 12th of June. The ESRI report shows that 87% of future claimants will see their rate of payment improve or stay the same. In addition, more women will qualify for the maximum pension rate under the TCA (rising from 54% to 75%) due to the removal of anomalies associated with the Yearly Average Method.

Richard Bruton (Dublin Bay North, Fine Gael)
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1030.To ask the Minister for Employment Affairs and Social Protection the start date for auto enrolment for persons not already in a pension scheme, and the initial rate of contribution for workers, for employers, and for the State when the scheme commences.[35837/24]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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The introduction of an automatic enrolment (AE) retirement savings system is a Programme for Government commitment and a key priority for me as the Minister for Social Protection.

Implementation of the AE system is now well underway, with the recent enactment of the Automatic Enrolment Retirement Savings System Act 2024 and the announcement of Tata Consultancy Services (TCS) as the preferred bidder to administer the AE system on behalf of the National Automatic Enrolment Retirement Savings Authority (NAERSA). The achievement of these two major milestones is significant and allows for Automatic Enrolment to become a reality in Ireland in 2025.

My Department is now focused on implementation, including putting in place ICT infrastructure, staffing and resourcing NAERSA, and conducting a procurement exercise for investment services providers. A communications strategy is being rolled out on an ongoing basis and will intensify as go-live approaches.

In terms of contribution rates, AE will be very gradually phased in over the course of a decade. When the scheme commences in 2025, employers and employees will make contributions at a rate of 1.5% each of the employee’s gross earnings, with the State topping up these contributions with an additional 0.5%. These rates will gradually increase every three years until they reach a maximum of 6% each from the employer and the employee and 2% from the State from Year 10 onwards.