Business Pensions

Friday 14 December 2018

Mothers again find caring carries a financial penalty

There are now huge gaps in the PRSI contributions of thousands of women (Stock photo)
There are now huge gaps in the PRSI contributions of thousands of women (Stock photo)

Charle Weston

Women who have recently retired are losing out heavily on State pension payments. Ironically, it was a woman who made the changes impacting them.

To get a full State contributory pension of €238.30 a week you need to have an average of 48 weekly PRSI contributions over your working life, with a minimum of 10 years' service. If you work and pay PRSI all your life you get the full pension.

But in 2012, then social protection minister Joan Burton changed the way people with less than the required PRSI payments needed for the full pension build up benefits. A move was made to an "averaging rule" to calculate the number of contributions. This hit those who do not have a full PRSI payment history. The change means the number of PRSI contributions is divided by the number of years between her first day of work and retirement.

This means someone who worked for a short while in the 1960s and went back to work in 2000 gets a smaller pension than someone of the same age who just started work in 2000. The changes punish women who took time out of work to care for their children.

Those who took time out of the workforce to care for children since 1994 are spared this financial hit.

But thousands of women who entered the workforce in the 1970s and 1980s, and then opted out to mind children, are not so lucky.

There are now huge gaps in their PRSI contributions. This matters as the number of years since they first started work to retirement is divided by their number of contributions to calculate their pension. If many of these women had not worked at all outside the home in the 1970s and 1980s they would be better off, according to Andrew McCann, author of 'Know Your Rights'.

No wonder Age Action and the Irish Human Rights and Equality Commission want the current Social Protection Minister Leo Varadkar to reverse what is effectively a pension cut.

Despite the ending of the marriage bar, it is clear that for many - caring still carries a financial penalty.

Irish Independent

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