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Pensioners to take a €600 hit due to surge in inflation, claims Age Action

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Annie Curbelo Lang (70) pictured in her home in Boyle, Co. Roscommon. She believes she has no choice but to work as she wouldn't be able to survive on the state pension. Photo: Brian Farrell

Annie Curbelo Lang (70) pictured in her home in Boyle, Co. Roscommon. She believes she has no choice but to work as she wouldn't be able to survive on the state pension. Photo: Brian Farrell

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Nat O’Connor: Those on state pension are most vulnerable

Nat O’Connor: Those on state pension are most vulnerable

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Annie Curbelo Lang (70) pictured in her home in Boyle, Co. Roscommon. She believes she has no choice but to work as she wouldn't be able to survive on the state pension. Photo: Brian Farrell

Surging price rises are hitting the spending power of older people like a “tsunami” and are set to force many of them to go without essentials like food, heating, transport and medical costs, advocacy group Age Action has warned.

It said someone on the full rate contributory state pension of €253.30 a week will face a cumulative €589.48 loss of spending power this year, with the greatest impact on spending likely to occur in the second half of this year.

It is calling for a €23 rise in the state pension in Budget 2023.

Age Action said many who rely on the state pension as their core income have the least capacity to make up for the lost income.

“So they will go without essentials like food, heating, transport or medical costs,” said its public affairs and policy specialist Nat O’Connor.

Age Action is set to start lobbying TDs and senators from this week, telling them that the 9.8pc inflation rate means that €1 at the start of this year will have a purchasing power of just €0.91 by December.

And it will lose more spending power in 2023.

Cash savings of €1,000 in January 2022 will have the spending power of €911 in December 2022

By December this year, the full rate contributory state pension will have lost at least €22.61 per week in spending power.

“Over the course of 2022, someone on the full rate contributory state pension of €253.30 will face a cumulative €589.48 loss of spending power,” says a briefing document prepared by Dr O’Connor for politicians.

Cash savings of €1,000 in January 2022 will have the spending power of €911 in December 2022, and interest rates are providing little or no compensation for this erosion of spending power, the lobby group said.

Age Action said there is a strong argument to raise the state pension, and all core welfare rates, in next month’s Budget to prevent people experiencing the worst of this year’s inflation.

The nature of inflation is that it is drip-fed into the economy, with bills and prices often going up just a few items at a time.

But the cumulative effect of lost spending power adds up, Age Action said.

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Nat O’Connor: Those on state pension are most vulnerable

Nat O’Connor: Those on state pension are most vulnerable

Nat O’Connor: Those on state pension are most vulnerable

Dr O’Connor has calculated that just 25pc of the impact of inflation has been felt this year so far, and 75pc of the lost spending power will occur in the second half.

“As a result of the drip feed, plus the lack of change to the nominal value of their income and savings, many people haven’t yet fully realised what 9.8pc inflation means for their spending power,” he said.

He said the kind of inflation we are currently experiencing is different from the “boom-time” inflation of the Celtic Tiger.

It is much more like the inflation of the 1980s in the sense that prices are rising but in isolation from the rest of the economy.

“If the ‘rising tide’ of the Celtic Tiger boom allegedly ‘raised all boats’, the current high level of inflation is more like a tsunami hitting the low-lying shoreline,” Dr O’Connor said.

“Only the people already sitting in boats will rise up, while everyone else will get swamped.”

Dr O’Connor said in a report that raising all core welfare by €20 and the state pension by €23 will cost €1.5bn, “in a context where the State is awash with revenue due to the effect of inflation”.

Revenue was up over €5bn by July, with large increases in robust tax bases like income tax and Vat. PRSI is also up, he said.

The State can afford to protect everyone on core welfare rates, but the political culture is so wedded to the “fiver” in the Budget, that politicians have not undergone the necessary change in thinking based on the analysis of what we are facing now, Dr O’Connor said.

He said they cannot see the full damage that “the inflation tsunami is going to cause” for people.

‘I am 70 – but if I stop working I don’t think I’d be able to manage’

Annie Curbelo-Lang counts herself lucky to have a roof over her head, but at 70-years-old she has no choice but to continue to work as she can’t survive on the state pension.

Speaking from her home in Boyle, Co Roscommon, she told the Irish Independent she can’t afford to buy heating oil despite working part-time on top of her pension.

“Unfortunately, I was given the wrong advice when I was doing the paperwork for my pension. I thought I had the right amount of stamps paid in because it said I had to have a minimum number. I had over that number even though I worked in Italy and Spain for years.

I’m in good health generally. If I can continue working, I can just about manage. But I can’t afford to buy heating oil at the moment

“But what I didn’t know was that was the minimum amount to qualify for a smaller pension.

“In the end, I had to go for a non-contributory pension which is not the end of the world because, in fact, it’s about €20/€30 less than the full pension, which seems unfair for people who have paid in for 30 or 40 years.

“But at the same time, as it is based on the cost of living, they pay much less because otherwise, you wouldn’t survive.

“My situation at the moment is not that drastic, but it can become drastic in the sense I don’t own my own home, I rent.

“I’m working part-time, I do a few hours a week, and sometimes I have to travel up to Dublin and can use the company car. I’m 70, and I’m in good health generally. If I can continue working, I can just about manage.

“But I can’t afford to buy heating oil at the moment, and it’s probably going to go up more later, so that is worrying.

“I’m on the HAP scheme, and I’m on the list for social housing. At the moment, my job pays for my rent which is €750. I get €640 from my work, it all goes on my rent. The HAP gives me the extra €110 every month to cover it fully.

“If I was to give up the part-time job, I wouldn’t have the car, and I wouldn’t be able to afford to buy a car.

“I don’t want to complain because Ireland, of all the countries in Europe, does treat its pensioners pretty well in general.

“But if you look at a person like myself who doesn’t have a private pension and doesn’t own property.

“If I didn’t have this part-time job, I don’t know how I would manage.

“The way the rents are at the moment, it’s crazy trying to find a place. And how do you, as a 70-year-old, share a place with other people?

I can’t go out and earn more than I do at the moment because they would take it off my pension

“I don’t want to have to live with my daughter, I want to be independent. You are allowed to earn up to a certain amount, and if you earn more than that, they cut your pension down.

“In Ireland, you have a situation that if you earn a certain amount, you pay 20pc tax, and nobody has a problem paying that much tax. It’s only right that we all pay tax.

“But if you earn a little bit over that, you are immediately charged 40pc. This means you don’t want to work overtime, and you don’t want to do any extra work.

“I can’t go out and earn more than I do at the moment because they would take it off my pension, so it’s not worth it. It doesn’t help me.

“Ireland, on the scale of housing, is disastrous. It has many other good points, but there is so little option out there for every age category.

“Due to the cost of housing, we will have a lot more people needing social housing in the future.

“I feel for myself, but I really also feel for young people.

“Now it’s almost impossible for young people to buy their own home or else they will be in their 60s or 70s paying off their mortgages.”


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