Monday 23 October 2017

Pension increase will be higher than rise in cost of living

The rate of inflation over the past year has been stagnant at around 1pc, meaning that under an indexed system OAPs would see their income rise by around €2.27 in October’s Budget. (Stock photo)
The rate of inflation over the past year has been stagnant at around 1pc, meaning that under an indexed system OAPs would see their income rise by around €2.27 in October’s Budget. (Stock photo)
Kevin Doyle

Kevin Doyle

Older people can look forward to a hike in their pension next year that exceeds increases in the cost of living, the Irish Independent can reveal.

Taoiseach Leo Varadkar indicated during the Fine Gael leadership contest that he favours a system which links pension rises to inflation - but he has now confirmed a larger increase will be on the table for next year.

The rate of inflation over the past year has been stagnant at around 1pc, meaning that under an indexed system OAPs would see their income rise by around €2.27 in October's Budget.

However, a spokesperson for the Taoiseach said: "The Government would hope to exceed that."

Sources said Public Expenditure Minister Paschal Donohoe is looking to operate in a "similar space" to last year when pensions jumped by €5 a week.

The money available for this year's Budget is considerably less and repeating that increase would cost in the region of €170m.

Fianna Fáil has not yet decided what it will argue for ahead of October's Budget but its social protection spokesman Willie O'Dea said the pension hike would have to be more than the rate of inflation.

While refusing to put a figure on what sort of pension hike he believes would be appropriate, Mr O'Dea noted that both Fianna Fáil and Fine Gael promised hikes of €25 and €30 respectively over a five-year period in their election manifestos.

"That was done on the assumption that the Government would last the full term. A commitment was made and people voted on that basis," he said.

"In principle an indexation system might be something for the future but for the meantime Fianna Fáil and Fine Gael have election promises. The first thing we have to look at is our manifesto pledge."

Mr O'Dea is credited with forcing the Government into hiking pensions by €5 in last year's budget, although Mr Varadkar then insisted the rise must be matched for other social welfare recipients.

Ahead of the formal budget talks Fianna Fáil is set to demand further increases for pensioners, carers and people with disabilities.

It is expected the Summer Economic Statement, being discussed by Cabinet today, will state there is somewhere in the region of €500m available for spending increases and tax cuts next year.

Irish Independent

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