51. Deputy Willie O’Dea asked the Minister for Employment Affairs and Social Protection when the report she has asked her Department to prepare on the post-2012 contributory pension band rates is expected to be published; and if she will make a statement on the matter. (Question 46919/17 asked on 07 Nov 2017)
Deputy Willie O’Dea: This question relates to the recent motion, passed unanimously by the House, on changing the pension contribution rules introduced in 2012. The Minister will recall that in her counter-motion, she made certain commitments, namely, that she would examine the problem, ask her Department to study it and get back to her, and then report to the Cabinet. Has that process started? If so, at what stage is it?
Deputy Regina Doherty: The Deputy is aware that it is my intention to bring forward the total contributions model for the calculation of pensions from 2020 onwards. We will be having a public consultation on that in the next couple of weeks or months, I hope. I have a document ready on the issue. I will be giving it to the Deputy and the other social welfare spokespersons in the House.
Arising from the anomaly that was created — it was not created in 2012 but exacerbated in that year — I committed to having my officials carefully examine the approaches we could take to address it. The process is actually very nearly completed. I had a meeting with my officials yesterday. I had hoped to bring the matter to the Cabinet today but I did not want to bring something that was only three-quarters baked. I have no doubt I will have it finalised in the next couple of days. It should genuinely prove my bona fides regarding my statement that we will fix this. I do not mean “we” as in Regina Doherty, Fine Gael or this Government. Collectively in this House, we will fix this anomaly, and I hope we will do so sooner rather than later.
The reason for the delay, from yesterday and over the next couple of days, is that some of the suggestions will create other anomalies. When we address one issue, we could find another needs to be addressed. Perhaps another, perhaps two steps removed, will bite us so I want to make sure that whatever decision we make to look after those who were disenfranchised over recent years will not result in a recurrence of the issue at another spot.
Deputy Willie O’Dea: I am happy with the Minister’s reply. I am glad she has moved so quickly to meet her commitment and that the study has been done. I am glad she is almost in a position to make a report to the Cabinet. Can she confirm to me again, for the record, that it is her intention to do something about this issue in the short term and that we will not be waiting until next year’s budget?
Deputy Regina Doherty: No, I cannot because it very much depends on how much doing so costs. The Deputy knows exactly what the social welfare budget is this year. He knows exactly where it is all pencilled in. There is not a resource somewhere that is not assigned to somebody. Addressing this and the options we choose will involve new money. The Deputy will have heard the Taoiseach state earlier that there is not in the overall budget new money sitting around. Whatever decision is made is one that will have to be made collectively by this House. We will have to find the money between all of us. I would like to believe we could do as the Deputy desires but I do not want to make a commitment in that regard right now until I know exactly how much it will cost.
Deputy Willie O’Dea: I am glad the Minister has not closed her mind to the possibility of doing something in advance of the next budget.
The Minister referred to the total contributions system the Government is preparing to introduce. Is she aware of a report by KPMG, produced at the instance of the Department, that a total contributions system would mean even fewer people, women in particular, would get at least 80% of their pension by comparison with now? I was fascinated to see the reference to the report because my understanding was that the total contributions scheme has not been devised yet. Whether the information is accurate will depend on the nature of the scheme. Has somebody asked KPMG to examine a particular type of scheme? I read the report but is it a reality? Perhaps the Minister could explain what it means and states.
Deputy Regina Doherty: Given that the Deputy has read the report, he will realise it is based on an examination of the next 30 years, asking what state the social contribution fund would be in if we did absolutely nothing and what options we could choose and what they would cost if we were to have it on a sustainable basis. I have said a number of times, and the Deputy is well aware, that when we move to any new model, there will be winners and losers. If one introduces a new total contributions model, there will have to be a grace period of a number of years to ensure people can pick from the new system or old system. If one does not have enough contributions to earn a pension at the full rate, one is well aware of it long before reaching retirement stage. The total contributions method is an absolutely fair way to reward people who have paid into a fund in that they can take money out of that fund on the basis of how much they paid in.
To answer the Deputy’s question on outliers, a decision has not been made. The outliers will relate to where the bands will start and finish and where the contributions for homemaker schemes will start and finish. None of those issues has been teased out. That is what the public consultation would be about.
Deputy Willie O’Dea: How did KPMG come to its conclusion?
Deputy Regina Doherty: These are actuarial geniuses and I am sure they have their methods and their models.