(Wednesday 19 July) Age Action is asking Government to raise the full rate of the contributory State Pension by €30 per week to restore its 2020 spending power, as a first step towards benchmarking the rate at 34% of average earnings, which should be achieved by 2026 as a ‘living pension’ alongside the introduction of the new national living wage.
Attending todays Pre-Budget Forum, hosted by Minister for Social Protection, Heather Humphreys, Policy Specialist with Age Action Nat O’Connor said “Many older people simply do not have enough to live on because the State Pension, that they depend on, is inadequate. The State Pension is the main income, or only income, for the majority of older people which is why the Government has to increase the core rate”.
Age Action’s pre-budget submission to the Department of Social Protection demonstrates that inflation has reduced the spending power of the State Pension to such an extent that the full rate would need to increase by €30 per week to give older people the same spending power that they had in 2020. Based on the latest projections for inflation in 2023, Age Action has calculated that the maximum rate of the contributory State Pension is currently €19.19/week lower in spending power than the same payment in 2020. By 2024, the same rate will have lost €24.60/week in spending power, which equates to a cumulative loss that year of over €1,280 (9.9%) unless the weekly rate is significantly increased to restore spending power.
“The lost spending power of the State Pension is undoubtedly a driver of the increase in poverty among older persons. Poverty and deprivation are rising for older adults due to high price inflation, with risk of poverty having doubled and consistent poverty more than tripled since 2020. Government must increase the core rate and introduce legislation to benchmark the State Pension at 34% of average earnings which would give income security to older people” said O’Connor.
Given that one in three older persons living alone was at risk of poverty in 2022 (up from one in five in 2020), there is a strong argument for targeting additional income support to older people living alone. Age Action is proposing raising the Living Alone Increase from €22 to €30/week to address the concentration of poverty among older persons living alone.