Thursday 29 September 2016

Fianna Fail set to force €5-a-week pension rise

Thousands of stay-at-home mothers get rock-bottom payments

Published 07/08/2016 | 02:30

An increase in the pension was agreed between Fianna Fail and Fine Gael as part of the confidence and supply agreement but no specific figure was set in the deal. (Maarten Wouters/Getty Images)
An increase in the pension was agreed between Fianna Fail and Fine Gael as part of the confidence and supply agreement but no specific figure was set in the deal. (Maarten Wouters/Getty Images)

Pensioners are in line for a €5-a-week increase in the old age pension in October's Budget as Fianna Fail is now demanding the rise in return for continuing to support the minority Fine Gael-led Government.

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The Sunday Independent has learned that Fianna Fail will push for the increase once Budget negotiations begin and plans to force Social Protection Minister Leo Varadkar to introduce sweeping reforms to the pension system.

Minister for Social Protection Leo Varadkar. Pic Tom Burke
Minister for Social Protection Leo Varadkar. Pic Tom Burke

Micheal Martin's party will also insist that Mr Varadkar fully restores the controversial cut to lone parent allowance in the Budget.

Fianna Fail will also call on the Government to urgently address serious flaws in the pension system, which have left thousands of stay-at-home mothers and carers of elderly or sick family members on rock-bottom pensions.

An increase in the pension was agreed between Fianna Fail and Fine Gael as part of the confidence and supply agreement but no specific figure was set in the deal.

Speaking to the Sunday Independent, Fianna Fail's social protection spokesman, Willie O'Dea, who is responsible for drafting the party's social welfare policy, said that he would be insisting on "at least a fiver increase" in the state pension.

But last night, a senior Fine Gael source dismissed Fianna Fail's demands and insisted: "This Government will decide what is in the Budget.

"Fianna Fail said they will be an opposition party outside the confidence and supply agreement and they will have to learn that the same applies to the Government in the other direction."

Mr Varadkar recently suggested that he would link pension rates to the cost of living. Based on current rates of inflation, this would mean an increase of little more than €1.

The Programme for Government agreed between Fine Gael and Independents commits to raising the pension above the rate of inflation.

And Fine Gael's general election manifesto pledged to increase the contributory state pension by €25-a-week within five years.

Fine Gael backbenchers will be anxious that the weekly pension is increased significantly, with the potential of a snap general election still looming. Mr Varadkar will, however, be under huge pressure to fully restore the lone parent allowance, which was controversially cut by his predecessor and constituency rival, Labour's Joan Burton.

"The lone parent allowance will be very awkward and he will hate it ideologically but he will have to do it," a senior Fianna Fail source said.

"Let's see how popular he is if he refuses to do these things," the source added.

Mr O'Dea also said that the restoration of the cut to lone parent allowance, which left 30,000 one parent families out-of-pocket, was a Fianna Fail priority for the Budget.

"What the last government did on the one parent allowance is a perfect example of policy doing the exact opposite of what it was supposed to do. It would take an awful lot of persuasion to convince me that all of these things should not be done in the Budget," Mr O'Dea added.

However, central to Fianna Fail's social welfare policy is a complete overhaul of how the contributory state pension is calculated.

TDs from all parties have been inundated in recent years with complaints from constituents, mostly older women, who are losing out on hundreds of euro every year due to an anomaly in the pension rules. In some instances, people who worked full-time and paid PRSI for most of their lives are getting smaller weekly pensions than those who worked fewer years.

It has even been suggested that some PRSI workers are receiving less than those who have never worked and who receive the €219-a-week non-contributory pension.

The weekly contributory pension ranges from €93.20 to €233.30, depending on PRSI contributions and years in the workforce. The problem arises for people who worked briefly when they were younger, before leaving the workforce to raise a family or become a full-time carer for a loved one but who then returned to employment in later life.

If the period of time that they left the workforce was before 1995, their PRSI contributions are averaged out over the number of years since they first gained employment, which could date back as far as the 1970s.

The contributory state pension is calculated by averaging the worker's PRSI contributions over the number of years that they were in the workforce.

This means that a person who entered the workforce for the first time later in life will potentially be entitled to a bigger weekly pension than someone who worked more years than they did.

Fianna Fail's policy document gives the example of a woman who spent most of her life working in the home and entered the workforce aged 56 in 2005. She would be entitled to the full contributory state pension of €233.30.

By contrast, a woman who re-entered the workforce aged 46 in 1995, after briefly working in the 1970s before becoming a stay-at-home mother, would get less, despite having worked more years.

The policy document on the issue states: "Individuals, mainly woman who have raised families, are being penalised for having paid a small handful of PRSI payments during what effectively amounts to a previous working life."

Sunday Independent

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