'We are devastated. We will have to give up paying out medical insurance'
PENSIONERS Patrick J Houlihan and his wife Noreen have started the year with an unwelcome financial shock.
Mr Houlihan worked for almost 40 years in the ESB and now gets a pension of €32,400 from the state electricity company, along with a state pension of €11,400 a year.
The couple get €1,247 every fortnight from the ESB, and €220 a week from what used to be called the old-aged pension.
But a bombshell letter from the Revenue Commissioners in the past few days has explained to them that the ESB has now been instructed by the tax officials to reduce the pension coming from the semi-state.
This is because tax officials have just started to exchange information with the Department of Social Protection, which is responsible for paying social welfare pensions.
Revenue had not previously realised there was a social welfare pension going into the house and officials have now started to tax it.
The Houlihans were not aware they were under-paying tax.
Mr Houlihan's tax credits -- the amount you can earn before you pay tax -- have now been adjusted. This has meant the fortnightly pension payment from the ESB has been cut.
"I am down €106 every two weeks," said the Parteen, Co Clare, resident.
Over a full year, the hit works out at €2,756.
"I am devastated. This will hit us hard. We will have to give up paying out medical insurance," Mr Houlihan said.
He reckons the introduction of the universal social charge at the start of 2011 cost the couple €47 a week.
And the Houlihans are not looking forward to having to pay the new household charge, while the prospect of water charges fills them with dread.