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Linking welfare to the average wage in industry: “Pensions must follow the costs”

Even if energy prices fall, other sectors of the economy will eat away at pensions and social benefits.

That’s according to Age Action, which welcomes proposals that could see these payments tied to the average industrial wage.

The plans, currently being drawn up by the Department of Social Protection, are expected to form part of the overhaul of the current pension system.

Calibrating social benefits to the average industrial wage would mean that payments could rise or fall with inflation.

Nat O’Connor is a policy specialist at Age Action Ireland. He said Pat Kenny it’s something they want.

“Most countries in Europe, including the UK, would have indexation and benchmarking of state pension and other social benefits.

“For example, this year the UK pension will increase by £18.70 stg – and they are doing this automatically, so that the pension follows the cost of living and also with average incomes so that people are not left behind for account in the company. .

“Over the past two years, energy prices have skyrocketed, people are struggling to choose between putting food on the table [or] maintaining heating.

“So we need the pension to meet those costs.”

He says that even if prices fall in one area, they are likely to rise elsewhere.

“Energy prices fluctuate…but prices generally go down very rarely.

“So what we will see is that even if energy prices go down next year [or] the year after, everything else – the new price of bread or milk or rent or whatever – will settle to the new normal.

“So there’s always inflation – so in other words, you always need your income to grow to have adequate income year-over-year.

“We may not have the big push, but we’re still going to have an upward trajectory.”

And he says a separate energy guarantee could also be put in place.

“Age Action called for an energy guarantee that…follows energy from top to bottom.

“So you could follow that on a separate energy payment, which would go up and down, but the basic pension certainly has to be adequate.”

Main image: an elderly man counting euro banknotes. Photo by: Rodica Ciorba / Alamy Stock Photo