Saturday 19 January 2019

The time spent caring for family is not only ignored - it actually hurts your retirement

'We need a fair pension system that values the contributions made by our carers - both men and women' (stock photo)
'We need a fair pension system that values the contributions made by our carers - both men and women' (stock photo)

John Church

Tuesday's Budget did very little for tens of thousands of pensioners who are losing as much as €1,500 a year for taking time out of the workforce to care for their families. They won't even get the €5 they read about in yesterday's paper.

This is because the previous Government changed the eligibility criteria for the contributory State pension in 2012.

While those entitled to a full pension were unaffected, those who would have been in line for smaller pensions lost out.

Not everyone gets the full State pension because not everyone has a full record of PRSI contributions.

Many pensioners, mostly women, left the workforce to care for their families.

Others were forced out by the marriage bar.

They are still entitled to a pension, but a smaller one - and in 2012 it was made smaller again.

Under the old system, if you had an average of 20 contributions, for example, you would have been entitled to €228.70. But after 2012, this dropped to €198.60, a cut of more of more than €30 each week.

As one of our members put it, this was a "mean and sneaky cut". It cut the pensions of those who would have been getting smaller pensions anyway and has helped to widen an already large gender pension gap.

The situation is made worse by the 'averaging rule', which is used to calculate your pension.

The number of PRSI contributions a worker makes is divided by the number of years between their first day of work and retirement.

For example, take a woman who worked for a few months in 1968 and then left to raise a family.

During her time away from work, she would not have made any PRSI contributions. She goes back to work in 2000 and retires in 2016.

Her total number of contributions are divided by 48 from when she started work in 1968. As a result, she gets a much smaller pension.

Her time caring for her family is not only ignored, it actually reduces her pension.

If she had not gone to work in 1968, she would have been entitled to a full State pension.

People are being punished because they went to work in the 1960s and 1970s.

And because the €5 is only for people on the top rate of the State pension, these pensioners only get a portion of that increase, so they lose out every single year.

We need a fair pension system that values the contributions made by our carers - both men and women.

The Homemaker's Scheme, which was introduced in 1994, needs to be backdated so that those people who provided care before then can also benefit from it.

We must introduce measures that address the gender pension gap.

We know all of that cannot be done in a single Budget. We know that it will take time.

But we also know that the changes which were brought in five years ago could have been reversed yesterday.

Last week, Age Action delivered to Social Protection Minister Regina Doherty 5,000 signatures collected by our members and by our colleagues in the Irish Countrywomen's Association and the National Women's Council of Ireland.

Each one of these signatures was a voice raised on behalf of these pensioners.

Each of them was calling for a fair State pension system, one that does not punish those whose contribution to our society was raising a family or caring for a loved one.

Each signature asked for the changes introduced in 2012 to be reversed.

Yesterday, every single one of them was ignored, so we're now asking Minister Paschal Donohoe once again to give these pensioners a fair deal and to reverse a mean and sneaky cut.

John Church is CEO of Age Action

Irish Independent

Also in Business