Controversial pension top-up scheme plugged at Citizens’ Assembly

A CONTROVERSIAL Fair Deal type initiative pension top up scheme – to “claw back” up to €200-a-week from elderly property owners with assets of around €200,000 has been plugged at the Citizens’ Assembly.

Dr Micheál Collins, assistant professor of social policy at UCD, told the Assembly – meeting to discuss the challenges and opportunities of an ageing population – that delving into Ireland’s property assets could ease a future pensions crisis.

Dr Collins said:  “Ireland is unique to the scale of home ownership – it’s how we keep our wealth and as Irish homeowners, it seems to me a bit mad that if people die and leave huge amounts after them relative to their standard of living up to their death, it’s passed to another generation and the past 10 to 15 years of their life, their wealth in that (property) is of no value to them.

“We shouldn’t look past the fact there’s a big bank of wealth there.” But he added, any change would have to be carried out by the State.

“If there’s potential to tap into that, to use some of the resources, get back some of their savings, their estate will be smaller, the inheritance tax might be better,” Dr Collins said.

“We haven’t thought about this in the public context because we didn’t know about that ‘til we got the data from the CSO.

“We shouldn’t look past it, for some elderly people there’s the potential there.”

According to data collected in 2013 but published in 2016 – the snapshot of wealth in Ireland, showed the average assets owned by households was just under €100,000.

But for those over 65 it was just over €200,000 – representing a third of all households.

“That’s still €100 to €200 euro a week additional resources,” Dr Collins said.

“It will come from the value of their asset, and the state can claw that back from their estates, to supplement their pensions,” he said.vertisement 00:08

“It’s a bit like how we work the Fair Deal scheme, it would decrease the inheritance of some but increase the standards for pensioners – I think we should really think about that.

“For a long time those of us who looked at income, didn’t know a lot about wealth but this survey gave us insight into the wealth people have in Ireland.

“It found the average mean wealth was €219,000 in housing, land, stocks, minus any debt.

“Averages can be misleading because those with very high income can skew things, so it’s helpful to look at the person with the median, which in 2013 was just under €100,000.

“For 65 and over it was just over €200,000 median wealth…if you dig into those figures it’s principally housing.

“But in that group there’s groups who have no savings or assets at all.”

Dr Collins said the state pension was the “bedrock” of the state pension system and the “vast majority” were claiming the state pension and therefore its funding should be examined.

“It’s important we should never lose sight of that – it’s hard to see how that will change …as the main income for pensioners in Irish society.”

A representative from the Assembly later told the group during a question and answers session, that he had a vested interest in the pension’s issue.

“My mother has dementia and requires 24 7 hour care – I ask the Citizens here this weekend to remember older people with age related conditions and with carers who need much greater help from the Government.”

He asked that the Government make a commitment to families, the elderly and carers, that it will continue to secure a stable income for pensioners in need and to look after this group.

The average income of a pensioner in Ireland in 2014 was €19,256.97 but according to Social Justice Ireland data released this year – poverty increased from 1994 until 2001 for pensioners in receipt of welfare benefits.

In 1994 5.3 per cent of pensioners were below the poverty line but by 2001, this rose to 49.0 per cent.

Dr Collins said he wasn’t aware of any other countries who take from property to prop up the pension system.

He stated that if the population thought about the situation they’d realise over the past 20 to 30 years, the economy has grown and the average wage has “grown enormously.”

Dr Collins also pointed towards CSO data showing that deprivation among pensioners increased from 2004 to 2015 and in that year, one in every seven pensioners experienced deprivation.

Other statistics released by Dr Collins showed that most pensioners on the state pension and other associated secondary benefits are able to afford the minimum standard of living – for one holiday a year and the cost of living annually.

A top economist told the Assembly the so-called “nirvana” of retirement was not what younger people often believed – and potentially extending the retirement age could also assist the nation’s pension woes.

Alan Barrett, director at economic think tank, the ESRI, said Irish society needed to have a discussion about setting an older retirement age and allowing people to work well into their old age.

This action would solve the potential of any pension crisis evolving, he explained.

“Some of the talk round time bombs and unsustainability is probably exaggerated,” Mr Barrett said.

“There are health components that add additional costs – it will be costly but how can we extend it? (The state pension pot.)”

“Can extended working lives be part of the solution,” Mr Barrett added.

“We would have more resources…if people delay retirement.”

The State has already increased the retirement age and it will again rise to 67 in 2021 and to 68 in 2028.

One slide Mr Barrett showed to the Assembly included a photograph of Thomas Stoddard, a U.S worker, who retired at 96-years-old.  He had worked for the Speakman Company in Wilmington, Delaware, since 1928.

Mr Barrett, didn’t discuss an older retirement age than those already set by State, but suggested it should become possible for workers to continue in their jobs well into older age and command better control of their finances. While also maintaining good mental health.

The economist pointed to a recent EU study tracking retired people and it found they had “depressive symptoms” over time.   “They found a negative effect, compared to those working,” he said.

The Citizens’ Assembly is meeting at the Grand Hotel in Malahide today to discuss the ‘challenges and opportunities of an ageing population.’

Tomorrow the group of public representatives will vote on a series of issues, including pensions, retirement and other matters affecting older people

One Response to Controversial pension top-up scheme plugged at Citizens’ Assembly

  1. patrick joseph mc July 10, 2017 at 10:07 pm #

    One wonders on what planet are some these academics on, theory and reality are seldom the same. The last time this idea was put into practice was when a certain bank sold it during the boom and now some people no longer own their family home as the loan increasing with compound interest is greater than the value of the home. A certain Radio program aired this problem in the recent past

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