Joint Committee on Social Protection, Community & Rural Development & the Islands publishes its submission to the Pensions Commission regarding pension related matters

In Families, News, Older People by Denis Naughten

The Joint Committee on Social Protection, Community & Rural Development & the Islands has published its submission to the Pensions Commission, detailing the Committee’s consideration of the Total Contributions Approach and other pension related matters examined by the Committee.

After seven committee meetings since January considering this very important issue, the Committee has issued 18 key findings and these are discussed in more detail throughout the document, available under Recent Reports on the Committee webpage

Committee Chairperson, Denis Naughten TD said: “The policies adopted by the State in terms of future pension provision will impact on all our citizens. Pension policy is also a crucial barometer of the value our State places on those who have given a lifetime of work in the service of our economy and our society.”

“Mechanisms for the calculation of pension provision need to account for a variety of life circumstances including proper recognition of family carers, raising children and therefore must be equitable in both design and application.”

The Committee agrees in principle with adopting a Total Contributions Approach for pension calculation, equity must be ensured by any new approach to pension calculation.

Denis Naughten explained: “The Total Contributions model working as the sole system of calculation would, for instance, disproportionately affect some women negatively. A rigid application of a single retirement age is not a fair reflection of the many variations in today’s working environment.

“A one size fits all model is no longer fit for purpose. We need to consider those working manual jobs, and those wishing to retire earlier or later in life.  Workers must be given the option of continuing to work if they so wish. The Committee discussed the value and contribution to society made by those who take time off for home-making reasons (male or female) and is of the opinion that their contributions to wider society should be recognised, and is reflected in our findings.”

Among the conclusions and recommendations:

 

  • The Committee agrees in principle with adopting a Total Contributions Approach for pension calculation, whilst retaining the current averaging model as a second option for reasons of equity;
  • The calculation should be based on 30 years contributions as opposed to 40 years in order to have a fair qualification for a state pension;
  • Carers, those providing foster care, those returning to full time education and people who take time off for home-making reasons should also be able to receive credit that would go towards their pension.
  • In relation to Widow’s Pension the requirement of a marriage certificate to avail of the scheme leaves out a lot of people who were partners and/or co-habiting and this needs to be addressed;
  • The means test for the IQA should be radically reformed, particularly as it relates to capital.
  • In deciding the state pension age, the variations in the work people undertake should be taken into account as those working in manual employment have, in many cases, no practical alternative to retiring earlier than those in less physically strenuous employment. The Committee recommends the re-introduction of the State Pension Transition at 65; workers must be given the option of continuing in work if they so wish.
  • The issue of equity in regard to PRSI contribution rates for employers/employees and Class S contributors needs to be further examined;  the Department of Social Protection should review its level and content of correspondence to highlight the need for voluntary contributions;
  • Examination should also be given to extending the obligation to pay the A and S rates PRSI to any remaining employees and self-employed persons not liable at present to pay the full rate PRSI.
  • The means test for the State Pension Non-Contributory should be revised with higher thresholds of income allowed before a reduced payment is made and by a reform of the means of assessing capital. The exemption for earned employed income by persons in receipt of a non-contributory pension should be extended to self-employed income.
  • The fact that the proportion of persons in receipt of non-contributory State Pensions, which are 100% Exchequer funded, is decreasing steadily should be factored into any calculation of the State Pension Contributory into the future. Eventually virtually everybody will have some entitlement to a state contributory pension.
  • People in receipt of supplementary welfare for more than a year should be entitled to credit for this period on social welfare; and relevant legislative amendments should be considered in regard to flexible retirement.

For more information about the work of the Committee on Social Protection, Community and Rural Development and the Islands, see the Committee webpage

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