It seemed straightforward.
Back in 2018, the Government committed to linking state contributory pension payments to 34 per cent of average wages. At the time, pension payments were already close to that benchmark.
However, in subsequent years pension payments were frozen while wages continued to rise. Soon, pensions fell well behind average wages; so much so that it would take a substantial increase to reach 34 per cent, costing the Government over €1 billion.
So the Government started moving the goalposts and re- defining the benchmark.
They first came up with a new measurement: ‘regular’ average wages. This excluded overtime, allowances and bonuses from average wages. This would have reduced the level of pension increases to reach the 34% of the revised benchmark.
However, this didn’t get much traction, mostly because it is not a common measurement.
The Government then came up with another benchmark: median wages. The median wage is the level where 50% earn above and 50% earn below. This, again, would have the effect of lowering the benchmark below 34 per cent of average wages.
What’s really at play here is that the Government made a commitment but did not factor that into policy. Now it doesn’t have a roadmap to reach the 34 per cent benchmark. This is a cavalier way to treat people’s living standards in old age.
We need a new road map to reach the Government’s promise of linking pension payments to 34% of wages over the medium-term. This should be seen as an investment in people’s living standards, reducing poverty (more than 1 in 8 people aged 65 and over suffer multiple deprivation experiences) and increasing life quality.
The Government should meet with SIPTU and civil society groups representing older people to agree a pathway to 34 per cent of average wages.
This is not something that can be done in one year, but it is fiscally feasible to phase it in over a number of years, if there is the political will. In short, the Government should keep its pension promise.