When the Joint Committee on Social Protection adopted its Work Programme in 2016, the issue of pensions was selected as an issue requiring investigation.
Subsequently, in the interest of making a timely pre-Budget contribution, the Committee agreed to concentrate in the short term on the matter of contributory State pensions. To this end, it held meetings on with Age Action Ireland and with the National Women’s Council of Ireland, Congress and Active Retirement Ireland.
I was delighted as Chair of the Social Protection Committee to be in a position to participate in this very important work that will impact all of us and our families in Ireland.
My hope for this recent report on the State Pension (Contributory) is that it will be very carefully considered by the Minister for Employment and Social Protection and by the Department of Social Protection in shaping future pension policy in Ireland so as to offer stability and financial comfort to us all as we age.
As people are living longer, the ratio between those of working age continues to alter, from five to one in the 2011 census and projected to fall to half that by 2050. This creates pressure on the existing pension system.
There are also current consequences of historic inequity, such as the impact of the marriage bar on the contribution records of affected women.
Key Recommendations for future of Contributory Pension
The Joint Committee is of the view that the current averaging system is inequitable and a new type of contribution system should be devised. The Joint Committee notes that the Minister is considering the introduction of a Total Contribution System to replace the averaging system.
However, the Joint Committee believes that proposals should be developed for a universal pension payment to replace the State Pension (Contributory and Non-Contributory). Any future development must be subject to gender and equality proofing.
Recognising the prospective introduction of a new pension system, the Joint Committee considers that the 2012 changes -specifically, the increase in the number of bands and the doubling of the minimum number of required contributions - are demonstrably inequitable and have had a disproportionate negative impact on women, and should be suspended immediately.
The introduction of caring credits must be examined to ensure no person suffers a loss of pension entitlement because of a caring role. The Minister should review the operation of the Homemakers’ Scheme and the Homemakers’ Disregard to enable recognition and compensation of the large cohort of women with inadequate contribution records due to historic inequities such as the marriage bar.
In the longer term, the Joint Committee recommends that the Government produce an action plan on ways to close the gender pension gap and ensure a fair pension for women.
The Joint Committee recognises that pension recipients deserve to have a feeling of stability and security about their incomes, and urges the introduction of some form of indexation of pension rates.
The Joint Committee recommends the installation of a triple-lock mechanism to ensure that pension rates rise annually by 2.5%, the rate of inflation or to maintain equality to 35% of average earnings, whichever is the greater.
The Joint Committee regrets the abolition of the pension transition payment which had been available to persons required to retire at age 65, and for whom the State pension would not become available until age 66 and ultimately age 68.
This has led to the position whereby the largest demographic in receipt of Job Seeker’s Benefit is retired persons aged over 65 years. The Minister should review the disparity between retirement age and pension age, and the proposed increases in pensionable age should be suspended.
The Joint Committee considers that mandatory retirement age should be abolished. No employee should be contractually obliged to retire based on age if they are willing and able to remain at work.
The Committee also noted that the Department should review the adequacy of the Living Alone Allowance.
It is our hope that the Minister for Employment and Social Protection carefully considers our recommendations in future policy development and the drafting of the upcoming budget.
In the autumn, the Joint Committee will continue and widen its examination of pension’s policy, looking at proposals for medium and longer term reform and giving particular consideration to the issue of gender inequality within the pension system. I am very much looking forward to that.
I would like to thank all those who participated in proceedings before the Joint Committee, with a special mention to Age Action, as well as those who made written submissions.
Their various contributions, together with that of the Committee Secretariat, to the production of the report are greatly acknowledged.