(Tuesday 26 July 2022)
Budget 2023 – No Ordinary Budget for Extraordinary Times
Age Action Calls for €23 Increase in the State Pension
Age Action, Ireland’s leading advocacy organisation on ageing and older persons, is calling for a €23 increase in the State Pension saying that Budget 2023 cannot be an ordinary budget. Age Action argues that Budget 2023 needs to deliver an evidence-based increase in the State Pension that is poverty-proofed and equality-proofed – a €23 increase in the State Pension is the minimum amount required to maintain the State Pension’s spending power. The reality of high price inflation is that the full rate contributory State Pension will lose €22.80 in spending power in 2022 and will further lose spending power in 2023 as inflation will still be high.
Speaking in advance of the Pre-Budget Forum, scheduled for Wednesday 27 July, Age Action’s policy specialist Dr Nat O’Connor said that “People living on the State Pension have seen their spending power go down every month since January, meaning people taking items out of their shopping baskets and turning off the heating at home to make ends meet. By December, the State Pension will have lost €22.80 in spending power. That is why Age Action is calling for a €23 increase in the maximum rate of the State Pension, which will just mean people standing still in terms of their spending power. If the maximum rate of the contributory State Pension is not raised by €23, any lower increase will be a cut in real terms.”
“It is important to remember that inflation in the economy not only drives up prices, but it also increases the taxes that are collected. Taxes are already €7.4 billion higher by June 2022 compared to the previous year. The Government will have plenty of additional tax revenue available to increase core social protection rates in Budget 2023. Increasing the State Pension by €23 is not only fair but it is affordable. Inflation-matching increases should happen automatically based on benchmarking and indexation of the State Pension, as they do in the UK and other countries” said Dr O’Connor.
“Raising pension rates so spending power remains the same will not drive further inflation. It is clear that any Government decision to raise social welfare incomes by less than the rate of inflation will be a political choice, not an economic necessity” Dr O’Connor concluded.
Age Action’s Budget 2023 headline asks from the Department of Social Protection include:
- Increase the full rate of the contributory State Pension by €23 and the full rate of the non-contributory State Pension by €22. Increase the full rate Qualified Adult rate by €15 and the Living Alone increase by €15.
- Commission a comprehensive analysis of the costs associated with ageing, and the cost of living for all older people.
- Expand all eligibility thresholds across all departments and agencies in line with any changes to the State Pension and other cash payments.
- Expand the means test for the non-contributory State Pension and other means-tested welfare payments and income supplements to compensate for inflation.
- Introduce an Energy Guarantee for Older Persons by reforming the Fuel Allowance.
- Increase the rate of the Benefit Payment for 65-Year-Olds to the same rate as the State Pension, with access to the same range of income supplements and supports.
- Budget 2023 should fund social insurance pension statements to be posted to all adults, spelling out their likely retirement income from the State Pension and encouraging them to save for retirement.
- Raise awareness of the Household Benefits Package and the new Additional Needs Payment among older persons.
- Budget 2023 should provide a stronger mechanism to enhance the pension eligibility of people, especially women, who have spent years providing care, with an allocation of €3 million in annual funding towards a dedicated Carer’s Pension for long-term family carers.
- Free Travel should be maintained and expansion should be considered.
- Create a Digital Allowance to support people on low incomes with the cost of digital devices and internet access.