Friday 20 September 2019

Thousands of pensioners in line for €30 a week boost after review of 'bonkers' system


Charlie Weston Personal Finance Editor

Thousands of pensioners are in line for a boost of up to €30 a week after the completion of a review of how their payment is calculated.

It comes after a controversial 2012 change to the State pension which left thousands out of pocket, and was labelled “bonkers” by Finance Minister Paschal Donohoe.

Now the Department of Social Protection has begun to write to almost 80,000 pensioners to explain how a new way of working out their entitlement to the State pension will affect them.

The review is expected to lead to increases of up to €30 a week for a large number of pensioners.

Those set to benefit from the new method of assessing pensions, known as a total contributions approach, are mainly women who took time out to mind children.

Social Protection Minister Regina Doherty said she has included enabling legislation for the new total contributions approach for assessing pension entitlements in the Social Welfare Bill, which was approved by Cabinet this week.

The Minister said she had included the legislation in the Bill to “hasten the changes for anyone who reached pension age on or after September 1st, 2012 and were awarded less than maximum rate, on post-Budget 2012 rate bands”.

The new assessment method gives credit for time spent in parenting or caring duties.

Minister Doherty said her department has begun to issue letters to over 70,000 Irish resident contributory pensioners, with a further 8,000 letters to non-resident pensioners planned to issue in December.

The letter will explain the review process and inform pensioners that the department will contact them directly with the outcome of their individual personal review.

Additional staff are being recruited to implement the individual pension reviews and the first review outcomes will be notified to pensioners in early 2019.

Personal pension entitlement rates will not be reduced as a result of this review, Ms Doherty said.

Anyone moved to a higher pension rate will have their payment backdated to March this year.

The department said that if the new calculation method disadvantages a pensioner, they can continue to receive their current payment.

Eligibility for the State pension is based on an averaging system, with total PRSI contributions divided by the number of years since the person began work.

However, the 2012 rule changes negatively affected people who left the workplace before 1994 for a period of time, particularly women.

Controversy erupted after 2017’s Budget when Minister Donohoe admitted on radio that it was “bonkers and unbelievable” that women were losing out in this way.

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