News
Cost-of-Living continues to Divide
The cost-of-living crisis in Ireland has become a grievous financial burden for most, but especially for those who depend on fixed incomes including state pensioners. Many individuals and families are continuing to struggle to meet their basic needs.
As we are aware, the VAT rate increased from 9% to 13.5% on the 1st of September with our members already feeling the pinch in their pockets. The increase in VAT has affected supplies of certain food and beverages in restaurants, take-aways and catering, hairdressing and beautician services, admissions to cinemas and museums, as well as holiday accommodation. Ireland now has the third-highest hospitality VAT rate in Europe.
As well as the increase in VAT we were also faced with the double whammy of an increase in fuel prices. Petrol excise rates rose by 7 cents per litre and diesel prices increased by 5 cents per litre. This was the second of three planned tax increases on motor fuel, the next increase coming into effect on October 31st.
Sinn Fein Finance Spokesperson, Pierce Doherty, recently appeared on RTE Radio 1 and responded to Pinergy Company’s promise of cutting energy prices from October. Pierce claimed that “wholesale electricity prices in Ireland have fallen by 64% in the last 12 months” yet Irish energy companies choose to continue to charge peak prices. He has called for an investigation by the energy regulator and advocated for the application of windfall taxes and levies on such companies which would follow in the footsteps of other European countries.
The overall inflation rate in Ireland has led to a general increase across the board, while social welfare rates remain exceptionally low and highly inadequate. Higher costs for housing, healthcare, and utilities have strained financial resources placing older people, and low to middle income families in financial insecurity or at risk of poverty. This situation has forced people to make difficult choices, such as cutting back on necessary expenses and sacrificing their quality of life.
It is difficult not to reflect on the Paper entitled “Survival of the Richest” published by Oxfam in January of this year. The paper found that the richest 1% have nearly twice as much wealth as the rest of the world put together.
Oxfam has called on governments globally to:
- Introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering.
- Permanently increase taxes on the richest 1 percent, for example to at least 60 percent of their income from labour and capital, with higher rates for multi-millionaires and billionaires. Governments must especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income.
- Tax the wealth of the richest 1 percent at rates high enough to significantly reduce the numbers and wealth of the richest people, and redistribute these resources. This includes implementing inheritance, property and land taxes, as well as net wealth taxes.
We continue to advocate for all older persons in Ireland and hope that Budget 2024 will bring significant change in reducing the financial burden for all.
Is it Careless to go Cashless?
The idealistic move towards a cashless society has raised its head once again today as the NCT (National Car Testing Service) has announced that they are going cashless.
In a post on social media, the NCT said:
“We’re saying goodbye to cash! NCTs are going cashless over the coming months for your safety and convenience, this means that payment must be made in advance of attending for your NCT. When introduced, payment can be made online or by postal order.”
Although we can appreciate the progression and major contributions of the digital age, it is imperative that those without digital access do not get left behind. This not only includes older persons, but also some persons with a disability or people on lower incomes. Therefore, once an organisation decides to go cashless, they immediately exclude those mentioned.
We know from research conducted by Age Action in 2022, that almost 300,000 people aged 60 or older were not using the internet. According to the CSO, 45% of persons aged 75 and over, have never used the internet. So, what does it mean for these people, when a company goes cashless?
Financial Exclusion: Going cashless limits access to essential goods and services such as the NCT, a mandatory requirement for all car owners. The decision also assumes that all customers are enrolled in a bank or financial institution and those without a bank account are immediately blocked from being able to pay.
Financial Security and Fraud: With the rise in number of scams online, through texts and phone calls, it is no wonder that anyone could be discouraged from entering personal information such as payment details online or over the phone. This can make one feel vulnerable and less trusting but can also leave someone open to risk of fraud or financial abuse.
Lack of Independence: As mentioned, the feeling of vulnerability extends into one’s ability and knowledge in navigating technological devices such as smart phones or computers. An older person may have to rely on someone else to carry out online payments for example. Having to share very personal financial information can feel like an invasion of privacy and once again, can leave such as person open to financial abuse.
Technological Barriers: Quite simply, not everyone has access to a phone, tablet or a computer for a number of reasons such as cost, quality or location. There are certainly numerous parts of the country that still do not have sufficient internet access which impedes a person’s ability to engage online.
Social Exclusion: Nowadays, digital exclusion can mirror certain aspects of social exclusion. A person may not be able to interact with group activities or outings if they are only advertised online or require digital payments. This completely isolates a person and can prevent them from participating fully in their community.
As you can see, the NCT’s decision to go cashless will have a profound impact on any vehicle owner who does not have digital knowledge or internet access. But what about the postal order?
The offer of payment by postal order again causes problems for the same cohorts of people. This would require accessible, in-person customer service at a bank or post-office that is in within a reasonable distance. Not to mention the fee that goes along with a postal order as well as the cost of petrol or diesel to get you there. The knock-on effect of this decision will surely affect multiple households and we support the call on Government to help in reversing this decision.
Seniors Trade Show 2023
On Tuesday 17th October, we will be heading to Bundoran in lovely Donegal for the Autumn Seniors Trade Show. We had a wonderful time participating in the Dun Laoghaire-Rathdown Age Well Expo back in June and engaged in enjoyable conversation with the DLR locals. As we received such positive feedback whilst bringing awareness to the issues surrounding older persons, we thought we would head to another part of the country to do the same.
The Seniors Trade Show is taking place in The Great Northern Hotel in Bundoran, Co. Donegal. Each year, the event has been run in different locations around Ireland such as Clare, Mayo and Wexford and the show continues to grow in popularity. The Seniors Trade Show promises to celebrate all that is good about ageing and will focus on areas such as Health, Activity, Financial Security, Travel, Holidays, Lifelong Learning, Social Connections, Sports, Cooking, Fashion, Investments, and Legal Advice. Most importantly, entry is FREE! For more information about the event itself, you can visit www.seniorstradeshow.ie.
WHEN: TUESDAY 17th OCTOBER
WHERE: The Great Northern Hotel, Bundoran, Co. Donegal.
We will be discussing our latest projects and the nature of the work that we do, to support and advocate for our members. We will have some free newsletters and other bits to give away and look forward to speaking to new people about ways in which we can support older persons in Ireland. If you would like to help us out on the day and discuss the work of the ISCP, please contact Niamh at development@seniors.ie
If you would like to attend,
you can register for your free ticket HERE.
***COMPETITION TIME***
If you wish to attend the event with your group, Seniorscard.ie who sponsor the show are holding a competition on Facebook for a FREE BUS TRIP for up to 50 people. Check out their post on Facebook below and be sure to like and share the post for your chance to win.
What does a smoothed earnings approach mean for the State Pension?
On the back of our successful Pension Promise Campaign, Deputy Seán Canney asked the Minister for Social Protection when the State pension will be increased to 34% of average earnings to meet the Government’s commitment on pensions; and if she will make a statement on the matter. Minister Humphries answered that a smoothed earnings method to calculating a benchmarked/indexed rate of State Pension payments will be introduced as an input to the annual budget process and will be submitted to Government in September each year, commencing this year. (Source: https://www.oireachtas.ie/en/debates/question/2023-06-27/405/#pq_405)
Minister Humphries also mentioned this approach at the Department of Social Protection pre-budget forum at Farmleigh House on 19th July when asked about linking the State Pension to 34% of Average Earnings. The Report of the Commission on Pensions recommends the Smoothed Earnings Approach. This concept is also discussed on Page 41 in the Roadmap for Social Inclusion where it is described as a smoothed earnings system, whereby the rate of pension payment will be linked in the first instance to average wages but, in years where the increase in average wages is less than the rate of increases in prices, it will be linked to the rate of inflation.
While we see this as more secure approach to determining state pension rates, our concern with this response is with the Government’s understanding and definition of average earnings. In the Report of the Commission on Pensions, average earnings exclude over-time, bonus payments etc. It references published CSO earnings statistics – calculating 34% of average earnings (excluding irregular earnings and overtime) and referencing the Harmonised Indices of Consumer Prices (HICP) to calculate a price adjusted rate.
According to Page 26 of the Pensions Commissions’ Working Paper on Benchmarking and Indexation, the use of a base earnings benchmark excluding irregular earnings and overtime is believed to be appropriate for the calculation of a base pension payment. If irregular earnings and overtime were to be included in the benchmark for calculation, then benefits provided to pensioners (e.g., Household Benefits, Fuel Allowance, Christmas Bonus, Free Travel, etc.) would have to be included in the pension payment calculation.
While we understand this rationale, this would not favour a large proportion of pensioners who do not receive any of these types of supplementary supports.
What would be the ramifications if irregular earnings and overtime isn’t included in the average earnings calculations?
By excluding these, the average earnings data would underestimate and under represent the actual income levels of individuals in Ireland. It may fail to capture the full extent of wage gaps and inequities that exist within the population as irregular earnings often vary across different occupations, industries, and demographic groups. This would also limit insights into economic trends and performance as irregular earnings can fluctuate based on economic conditions. To ensure a more comprehensive and accurate assessment of income levels, income inequality, compensation structures, and economic trends, it is important to include irregular earnings and bonuses in average earnings data.
What would be the ramifications for the pensioner?
As the pension rate would be benchmarked to 34% of Average Earnings, the exclusion of irregular earnings and overtime will see a significant drop in the pension rate. Using the latest data from the EHECS (Earnings Hours and Employment Costs Survey) as an example, the difference between the inclusion and exclusion of irregular earnings would be as follows:
Example 1: Including irregular earnings and overtime
€902.56 is the calculated Average Weekly Earnings from Quarter 4 of 2022. This would result in a weekly pension rate of €306.87
Example 2: Excluding irregular earnings and overtime
€812.90 is the calculated Average Weekly Earnings from Quarter 4 of 2022. This would result in a weekly pension rate of €276.39
This results in a difference of €30 per week, €120 per month and €1440 per year which is a considerable amount for anyone to lose out on, particularly for those with no other source of income.
We ask Government and Minister Humphries to review this method in order to best serve all pensioners by including irregular earnings and overtime in their average earning calculations, ensuring pensioners will end up with more money to help counteract the acknowledged cost-of-living increases.