Pensions: The attacks continue

Previous issues of Socialist Voice have dealt with the attacks on the state retirement pension and the neo-liberal agenda of entrenching inequity under the guise of reform. These changes range from extending the retirement age to forcing workers to take out private pensions.

Previously the minister for employment affairs and social protection, Regina Doherty, said that the Government was committed to the state pension, which “will remain the bedrock of the pension system and a protection against poverty.” She went on to say that the state pension “is not designed or intended to deliver full income adequacy in retirement.”

The reason for the new proposals is that the majority of workers will have only the state retirement pension on retirement. Her latest proposals are designed to further undermine the state retirement system as it now stands. In effect the minister, and the bourgeois commentators, regard anything with the word “state” as being tainted and bad.

She now proposes to means-test state retirement pensions. Her proposals are consistent with previous attacks. There is little critique by the mainstream media of the Government or its proposals. The current Government is very media-savvy. The bourgeois press spends more time reporting on trivialities about politicians falling off swings than on investigating economic facts.

The methodology of the Government is very clear: a statement by a minister or a quango on a particular issue, followed by media-friendly reports to test the reaction before proceeding further; try to portray it as a “There is no alternative” scenario.

Next year’s budget is due in October. Various lobbying groups are now submitting proposals. The Irish Times of 6 July reported the minister as stating that “the welfare system is not working for thousands of households living in poverty.” She said she wanted a minimum basic income so that everyone has a minimum essential standard of living (MESL).

This concept comes from the Vincentian Partnership for Social Justice. This is a private lobbying group set up in 1995 and comprises the Society of St Vincent de Paul, the Daughters of Charity, the Vincentian Congregation, and the Congregation of the Holy Faith. This group looked at various types of household and in relation to pensioners came up with the following facts:

  1. An urban pensioner couple on welfare need €314.60 per week for an MESL but at present are getting €425.82 per week, i.e. €111.22 more than they need.
  2. A similar rural couple need €386.11 per week but get €425.82, i.e. €39.71 more than they need.

The reason for the difference in the MESL is that the urban couple have access to public transport, while the rural couple would need to provide their own transport.

Leaving aside the specifics of even claiming that pensioners are getting €100 too much, the minister, in some sort of Dickensian mindset, is proposing that pension payments should be means-tested to ensure that no-one is getting too much!

Another part of the background to the attacks on state pensions is the Melbourne Mercer Global Index. This index compares pension schemes around the world. In its report for 2018 Ireland ranked 12th out of 34 countries. The top two were the Netherlands and Denmark. Under the terms of the report, the Irish pension was deemed good, but Ireland lost points when it came to sustainability.

“Sustainability” is the new term for the “pensions timebomb.” (The latter topic has been addressed in previous issues.) This time, sustainability has been deferred to 2050. Why would anyone need a horoscope when these prophets can look thirty years into the future?

As far back as 2016 the Society of Actuaries in Ireland reckoned that a means-tested system with a possible income cap over which there would be no state pension could save the state a considerable amount of money and reduce the amount of GDP required to pay for pension provision. Likewise (as previously mentioned in Socialist Voice), the OECD in 2014 advocated a basic flat-rate pension, with means-testing for top-ups for those with no other income.

It is clear from these various reports that there is considerable background to the minister’s comments. Fianna Fáil dismissed her proposals as “kite-flying.” It’s far from it. The whole thing would be easy to implement. At present, non-contributory state retirement pensions are means-tested, as are medical cards and a range of other state benefits; so the Department of Social Protection already has experience and practice in this area. Extending means-testing to the contributory state retirement pension would merely involve extending the existing practice to all state retirement pensions.

The minister could also stop paying increases, or link increases to the consumer price index. The key issue would be to break the link between paying PRSI and an entitlement to a state pension. The Labour Party already did this in the “reforms” it made, thus laying the foundations for this latest attack.

The political class in this country are little more than surrogates for the private sector. There is little doubt that the minister is going to give effect to the demands of the free-market anarchists.