Answered on June 18, 2013
Deputy John Deasy asked the Minister for Social Protection if her attention has been drawn to the fact that a new European Commission study, The Gender Gap in Pensions in the EU, indicates that Irish women aged 65 years and over receive an average pension which is 35% lower than the average for Irish men in the same age group; her view on the reason for this imbalance; and the efforts being made to address same.
Reply from Minister Joan Burton: The recently published European Commission report, ‘The Gender Gap in Pensions in the EU’, deals with the gender gap in pensions across Europe and is the first study of its kind. The study reveals that across the 27 EU Member States, women who are currently in receipt of pensions, receive average amounts which are 39% lower than those of men. For Ireland, the report indicates this pensions gender gap is 35%.
The report considers total income received from all sources including State, occupational and private pensions. I am pleased to note that for those on modest levels of income, which would broadly include the State pension, the report details that the gender pensions gap in Ireland is considerably lower at 3.5% compared to the EU average of 48.7%. This indicates that the Irish State pension has been successful in providing citizens with a basic level of income in a more gender balanced manner than our European counterparts.
However, for those on the highest incomes, which includes income from occupational and private pensions, the report indicates a gender pensions gap in Ireland of 44.7% compared to an EU average of 39.4% In providing a rationale for this pensions gender gap, the report notes that pensions in payment reflect yesterday’s employment and social norms. Thus, the effects of historical lower female employment rates and breaks in employment during careers are clearly apparent for women.
In relation to the State pension, the Actuarial Review of the Social Insurance Fund published in September 2012 confirms that the Fund provides better value to female rather than male contributors. The Review shows that those with lower earnings and those with shorter contribution histories, mostly women, have and will continue to obtain the best value for money from the Fund due to itsredistributive nature.
Many women now in retirement were homemakers and rely on benefits available from their spouse/partner’s pension scheme. Also, women generally live longer than men. These factors mean that these women can be more vulnerable in relation to retirement and as such women have been one of the priority groups targeted by the National Pensions Awareness Campaign in recent years.
The Homemakers Scheme makes qualification for the State pension (contributory) easier for those who take time out of the workforce for caring duties. The scheme was introduced in and took effect from 1994. The scheme allows up to 20 years spent caring for children under 12 years of age or incapacitated adults to be disregarded when a person’s social insurance record is being averaged for pension purposes. This can be beneficial for women who have taken time out of the workforce for caring purposes.
In relation to supplementary occupational and private pensions, both the labour market participation rates and supplementary pension coverage of women have improved greatly over the last number of years reflecting the development of Irish society: this will reduce the pensions gender gap for future retirees. In 1987, female participation was 35% whereas in 2012 this was 52.4% (compared to 67.3% for men). In Q1 2002, 45 per cent of females and 57 per cent of male workers had a private pension. By Q4 2009, the rate for female workers had increased to 49 per cent and the rate for male workers had decreased to 53 per cent.
However, notwithstanding this, it is estimated that just half of those in employment between the ages of 20 and 69 years have supplementary pension coverage. As I have highlighted previously, this relatively low rate of coverage in Ireland and the adequacy of that coverage is a key concern of the Government. That is why the Programme for Government includes a commitment to reforming the pensions system to progressively achieve universal coverage.
As the Deputy will be aware, the OECD recently launched their Review of the Irish Pension System which I commissioned in recognition of a need for a focused review of Ireland's pension policy, taking economic conditions into consideration, and to provide recommendations for long-term reform.
One of the key findings of the OECD was to confirm that private pension coverage, both in occupational and personal pensions, is uneven and needs to be increased urgently with a view to improving the adequacy of pensions. The review acknowledged that while the State pension has been successful in lifting older people out of poverty, the financial challenges of our changing demographics and aging population mean that we need to improve occupational and private pension coverage. It is for this reason the introduction of an auto-enrolment system is currently being considered. Such schemes are a very proactive way in which supplementary pension coverage can be increased, with more adequate pensions and improved outcomes in retirement for all workers including women.
Detailed analysis of options advanced in the OECD report will be required before decisions can be brought to Government. Consideration of the recommendations of this Report will also inform further developments in pensions policy. I will bring proposals to Government in due course setting out my long term plans in this area.
Dáil Éireann allocates a certain amount of time on Tuesdays, Wednesdays and Thursdays during which Deputies may ask questions of Members of the Government relating to Public Affairs connected with their Departments, or on matters of administration for whch they are officially responsible. The Taoiseach answers questions on his own Department on Tuesdays/Wednesdays.