DÁIL QUESTIONS WITH MINISTER VARADKAR ON PENSION REFORM

  1. Deputy Thomas P. Broughan asked the Minister for Social Protection the expected timeframe for his upcoming action plan for pension reform, as outlined in his 2017 priorities for his Department earlier in January 2017; and if he will make a statement on the matter. [2728/17]

Deputy Thomas P. Broughan: Pensions are on the Minister’s list of priorities that he published a few weeks ago for his action plan for pension reform. I think matters of concern include the transposition of the EU directive on institutions for occupational retirement provision, IORP; the revision of the directive, IORP II; and auto-enrolment in defined contribution pensions. I know we had a lengthy discussion about pensions earlier but I ask the Minister his progress in this regard. I think he mentioned he might bring forward legislation on at least one element of this in the near future. Pensions across both sides of the Irish Sea are of particular interest. I think the Minister has had some discussions with British Ministers on the impacts of Brexit on social protection in both countries. What has been achieved in this regard?

Deputy Leo Varadkar: Our pension system was set up over a century ago to provide an adequate and sustainable standard of living, and to prevent an unwanted reduction in living standards when people retire. As the Deputy will be aware, there are a number of challenges currently facing the Irish pensions system, including the sustainability of the system over the longer term in light of demographic change, rising life expectancy and the adequacy of contribution levels and benefits. While the State pension was intended to guard against extreme poverty, our expectations have risen since then and rightly so. People now expect and should expect a decent life and comfort in retirement.

Without change, a majority of our citizens will rely largely on the State pension in retirement unless the overall pension system is reformed. The cost of maintaining our current standards must be funded and increased longevity has huge implications for spending on State pensions.

I have highlighted previously that pension reform will be a priority of my Department and, earlier this year, I confirmed an intention to develop, publish and commence the implementation of an action plan for the reform of pensions. It is my intention that this action plan will be published this year upon completion of the required developmental work. This action plan will include a roadmap for the reform of the State pension, rationalisation and reform of the defined benefit pension landscape, transposition of the Institutions for Occupational Retirement Provision, IORP2, Directive and the introduction of auto-enrolment defined contribution pensions for all working people which I discussed earlier.

In respect of interactions with my British counterparts, I had one bilateral meeting in Brussels some weeks ago with one of my counterparts and will travel to London in the first week of February to meet the Secretary of State for Work and Pensions, Damian Green. Among the issues being discussed are pension rights as there are 35,000 people in this country and 135,000 people in the other jurisdictions who receive part of their pension from the United Kingdom. I am determined to ensure those pensions rights are protected.

Deputy Thomas P. Broughan: That is good to hear. Will the Minister and his Department have any input into negotiations between the EU and the UK to ensure a robust position is taken in respect of the protection of pensioners’ rights between the two jurisdictions?

Has the Minister given any thought to reform of the homemaker scheme which came up in the discussion on Deputy Durkan’s question about the kind of discrimination that these workers, who are mostly women, feel as they retire? They receive approximately €196 per week or that type of award as their State pension. They feel very hard done by. Has the Minister estimated the cost of reforming the homemaker’s scheme to give those workers on home duties or caring a better pension?

Deputy Leo Varadkar: Yes, I have, and as I committed to Deputy Curran and others, we will bring forward detailed options and proposals for change with the associated costings to the Oireachtas Joint Committee on Social Protection. If we move from the averaging approach to the total contributions approach, the homemaker credit scheme has to change because the basis on which it exists changes. The intention would be to have those changes in place but not to recalculate the pensions of everyone who is retired. It would cost hundreds of millions of euro which would be prohibitive. The new rules would apply to future pensions. If we were to apply the new rules to people already retired, we would be cutting some pensions too. That is not something I want to do to anyone. I have ruled it out. Under no circumstances will anyone who is already retired have their pension reduced.   Brexit is still a developing picture as Deputy Broughan knows. I want to maintain the arrangement between Britain and Ireland which has been in place for a very long time, that people in Britain are free to work in Ireland and vice versa, that people in Britain are free to claim welfare in Ireland and vice versa and that we recognise each other’s social insurance contributions as being the same. Someone who paid ten years’ national insurance in Britain and ten years’ pay related social insurance, PRSI, in Ireland is paid for 20 years, wherever he or she is. It is possible for us to maintain those arrangements. I am more optimistic about what can be done in respect of people than I am about trade and goods. My focus will be on people.