Pension contribution anomalies
Deputy O'Brien challenges the 2012 pension contribution changes and says the Government was forced into a partial reversal. The Tánaiste defends the new pension measures as a fair improvement for thousands, while O'Brien argues it still leaves another cohort behind and presses the Government on the cost and fairness of a full reversal.
In recent days, the Government has given in to pressure and decided to partly address the anomaly that the Government created and voted for in 2012 when the former Minister for Social Protection, Deputy Joan Burton, made changes to the State's pension contribution rules. The Government ploughed ahead and voted for the cut despite having the discrepancies and anomalies pointed out to it at the time. I and my Fianna Fáil colleagues trenchantly opposed those changes in 2012. This decision was also made against the background of the blatant and crude raid on the private pension funds of hundreds of thousands of people to the tune of more than €2.4 billion.
Legislation was also introduced to undermine the very basis of defined benefit schemes, which led to the destruction of some of the largest pension schemes in the State, including the Irish aviation superannuation scheme and the Aer Lingus pension scheme. The imposed changes to band rates and entitlements to the State pension resulted in thousands of people, women and men, receiving a lower rate of pension. The changes included doubling the number of contributions required from 260 to 520 in order to qualify for a full contributory pension. It was a replacement of the bands that had been introduced in 2000. The Minister for Finance, Deputy Donohoe, speaking in a radio interview after the recent budget described the cuts as "bonkers" and "unbelievable", but he voted for the cuts. The Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, was herself exasperated, but she voted for the cuts. Deputy Joan Burton has said that she regrets those cuts, but she introduced them and voted for them.
The Government's decision resulted in some instances of people losing in the region of €30 per week, which is €1,500 per annum. This is a significant sum of money for most people, especially those who were solely dependent on the State pension. The Minister, Deputy Doherty, conducted a review after the anomaly was pointed out to her, and particularly after the Private Members' motion brought forward by my party colleague, Deputy Willie O'Dea, and Fianna Fáil which was agreed in this House. It was agreed unanimously, with the abstention of Government Members.
It was announced this week that the Government will partially address the anomaly by introducing a home carer's credit and letters will be issued to ask for evidence of those affected and asking them to liaise with the Department so the anomaly can be addressed. While this is a small step in the right direction that is welcome, many related issues remain to be addressed. The Minister is still not able to confirm how many people will benefit and she cannot rule out the fact that the pension regime will not impact on those who come to retirement in the next three to five years. The Minister also cannot confirm when 40% of those affected, who are men, will have their pension reductions addressed. Is the Tánaiste content that Ireland is now no country for old men? Is the Government anti-men? The pension's anomaly has to be addressed but it must be addressed for all of those who are affected and not just for the portion of people identified by the Minister. Is the Government committed to reversing the 2012 changes in their entirety and reinstating the former pension regime, which is the fairest way to proceed?
Comment on this
Over the past months the Minister, Deputy Doherty, has been considering how and when to address the issue of the 42,000 people who were affected by the pension rate band changes in 2012. We listened and we worked on a solution. This week, the Government formally approved a positive change in the pension system. The announcement means that a new total contributions approach will be available to pensioners who were affected by the 2012 changes and will include up to 20 years of a new home carer credit. This approach will significantly benefit many people, particularly women but also men, who may have taken time out from the workforce to look after children or to care for parents, and whose work history includes an extended period outside the paid workplace while they raised families or performed other caring roles.
Under the total contributions approach, the pension given will more closely match the contributions made. I believe this to be fair. This approach will make it easier for pensioners who are assessed under the yearly average model to qualify for a higher rate of State pension. The total contributions approach, TCA, will ensure that the totality of a person's social insurance contributions - as opposed to the timing of them - will determine the final pension outcome. The Minister has worked closely with the Fianna Fáil spokesperson in this area and with those from other parties. The measure will cost the State some €40 million this year so it is a significant change that we should welcome rather than look to undermine.
Comment on this
I am not undermining it in any way. I put it to the Tánaiste that his Government was dragged kicking and screaming into reversing the changes that the previous Fine Gael Government brought forward. It is certainly welcome that in time many people will receive a reimbursement of money that should have been due to them. Most of those people are women who worked in the home raising their families, having a break in their employment service. We welcome this. It is one of the things our party has called for, but is the Government leaving another cohort of people behind? The Minister, the Tánaiste and the Government need to ensure that they are not leaving people behind while it is dealing with part of the issue with a small step in that direction to rectify the situation. The Minister, Deputy Doherty's approach is leaving propel behind. I ask the Government to commit to putting forward a plan to reverse the cuts in their entirety. We accept that the proposed change is a step forward but we will not accept that other people who may lose out who may have been unemployed at the time, who may have been self-employed or who may have been training. This could be some 40,000 additional people. The matter needs to be addressed.
Comment on this
This issue of pensions does not solely relate to the 2012 changes. This goes back 20 years when people took time out from the workforce, or in some cases women were forced out of the workforce.
Comment on this
The current anomaly is not all of it, but it is a major part of it.
Comment on this
The Government doubled the criteria and set the bar much higher.
Comment on this
The option being called for today, which is a complete reversal of the rate band changes from 2012, would cost an estimated extra €70 million this year on top of what was already announced. We have just been through a budgetary process and Fianna Fáil was involved in that-----
Comment on this
The Government is going to leave all those people behind.
Comment on this
We have made a significant change this week that is welcome. It will solve the problem for many thousands of people.
Comment on this
It is wrong to do it for some and not for others.
Comment on this
We are moving towards introducing a new approach to pensions, which is based on lifetime contributions. The more one pays the more one gets. This new pension system will be implemented post-2020.
Comment on this
The money will only be paid until 2019.
Comment on this
In the meantime we are trying to deal with an anomaly in as fair a way as possible-----
Comment on this
-----it is a policy decision made by the Government.