Active Retirement Ireland, the country’s largest membership organisation for older people, has described as “meagre” the €12 per week increase to the state pension that came into effect on 2 January, saying it will do little to reduce the number of older people at risk of falling into poverty in Ireland.
The charity is calling on the government to deliver a benchmarked state pension indexed to wage growth, which it says would allow older people to live with dignity and greater income security.
Following the Budget 2024 announcement in October last year, a consultation carried out by the organisation among members in receipt of the state pension found that just one in 10 of those surveyed (11%) felt the €12 per week increase would give them more freedom to enjoy a better quality of life.
More than a third (35%) said the increase would not alleviate any pressure in meeting basic living costs, and, when asked what the additional €12 a week would cover, more than two thirds (69%) of respondents said it would go towards paying for basic essentials such as heating, electricity and phone bills (41%) or groceries (28%).
Active Retirement Ireland CEO Maureen Kavanagh said: “When the €12 increase to the state pension was announced by the government last October it was not enough, and now that it is finally in effect, it is still not enough. The simple fact is that the state pension is not keeping pace with inflation.
“The additional €12 that pensioners will have only started receiving in the past couple of weeks is not an increase, rather it is a brace to slow the ever-weakening buying power of the pension year-on-year. When you consider that this money will be instantly absorbed by higher costs of basic goods and services — and straight back into the strong economy older people are being locked out of — this meagre, so-called ‘increase’ is actually €0, if it is not in minus.
“We’ve had a freezing start to 2024 and this will see older people — like the rest of us — needing the heating on that little bit more. We’ve just heard that the cost of postage stamps is going up, we know private health insurance premiums are set to rise significantly, and all this while gas and electricity prices remain at twice 2019 levels, and the cost of groceries is up 20% from 2022.”
Ms Kavanagh continued: “Wages increase to keep pace with the cost of living, why is it that the pension does not? We and our partners in the Pension Promise Campaign have repeatedly called for an adequate, benchmarked state pension that is indexed to wage growth in Ireland, and we are the only country within the Eurozone that doesn’t do this.
“It is time for the government to benchmark the state pension at 34% of average earnings and give older people in Ireland greater income security and the dignity they deserve. 34% is the figure the government deemed necessary to deliver basic pension adequacy and which the government committed to in 2018 but have still not delivered on, six years later.”
Ms Kavanagh added: “Against current wage data, meeting a benchmark of 34% of average earnings would mean a full state pension rate of around €318 per week. Even with the €12 increase, the full state pension is still €40 per week short of this figure.”
The Views of Pensioners on the State Pension
As part of a consultation carried out by Active Retirement Ireland in October 2023, members in receipt of the state pension were asked what difference it would make to them if an increase of €40 per week instead of €12 to the state pension was introduced. A key theme among respondents was increased financial security and peace of mind, with one in five members surveyed saying that the additional income would mean less worry.
A member from Co Laois said: “It would make a huge difference. I could get my hair done, and not to have to worry so much. Everything is so worrying all the time to makes ends meet. I skip dinner most days.”
A member from Co Meath said: “It would mean I can sleep at night.”
Other members said a €40 per week increase would mean they would be able to afford to pay someone to help them around their homes.
A member from Co Kilkenny said: “I would use the money to right my garden. It is always very overgrown, so I would use it to pay someone to cut the grass as I can’t do the work myself anymore.”
A member from Limerick said: “Help around the home would be most useful but the €12 wouldn’t even cover one hour. (The additional €40) would mean I could afford two hours home help.”
A member from Co Dublin said: “[It] would give a cushion for other things I’m unable to do myself — climbing ladders to cut the hedge or paint and decorate.”
Some members said that if the state pension was benchmarked at the government’s own proposed rate of 34% of average earnings, the extra €40 each week would make it possible for them to take part in more social activities and feel less lonely.
A member from Co Mayo said: “I could increase my activities to curb isolation and [it would] help with my bills as groceries have got so expensive.”
“A member from Sligo said: “I’d be able to have a better social life and not worry about paying bills.”
According to Active Retirement Ireland, in 2021, the state pension rate equated to 32% of average earnings, falling to 30% in 2022 and 28% in 2023.