Sunday 18 August 2019

€1k payback for pensioners to correct 'bonkers' anomaly

True scale of financial hit from 'bonkers' anomaly

Stock image
Stock image
Philip Ryan

Philip Ryan

More than 16,000 pensioners have seen their weekly payments topped up by over €20 a week after the Government was forced to review a "bonkers" pension anomaly which left them out of pocket, the Sunday Independent can reveal.

The true extent of the pension injustice can now be revealed as new figures show the Government will have to pay at least an additional €1,000 a year to some pensioners who fell victim to a change in how pensions were calculated.

Please log in or register with for free access to this article.

Log In

With a Government review of more than 90,000 pension payments almost completed, it can also be revealed that a further 15,000 pensioners have received weekly increases of €19 or less.

The injustice arose following changes to how pensions were calculated in 2012 and mostly affected women who left the workforce to care for children.

Fianna Fail social protection spokesperson Willie O'Dea said the majority of pensioners who had their cases reviewed were still receiving less than they would have been entitled to before the flawed calculation system was introduced.

"The vast majority of those who were lucky enough to get increases are still getting payments which are falling short of what they should be getting if the rules hadn't been changed in the first place," Mr O'Dea told the Sunday Independent.

"The system is still completely unfair and the Government should have just undone the flawed legislation rather than introduce a hugely complicated system to try to fix the problem."

The new figures show a Department of Social Protection taskforce has to date reviewed 77,193 of the 90,000 pension payments believed to have been impacted by the anomaly.

The review established by Social Protection Minister Regina O'Doherty found 32,421 pensioners were entitled to top-ups under the system introduced to address the pension injustice. This means 44,772 older people have been left disappointed after they were told they would not see their weekly pension increase.

Of those who are entitled to an increase, 51pc, or 16,534 pensioners, will see their pension payment increase by €20 per week or more, while the remaining 15,887 pensioners will receive €19 or less.

All payments will be backdated to March 30, 2018 or the pensioner's 66th birthday if later, meaning some pensioners will receive a payment of €1,000 a year or more.

The Government was forced to address the pension injustice, which Finance Minister Paschal Donohoe admitted was "bonkers", after TDs came under huge pressure from angry pensioners.

The controversy arose in 2012 when the Fine Gael and Labour Party coalition made changes to pension bands which led to pensioners losing out on full pensions because they had taken time out of the workforce to raise families or care for loved ones.

This affected tens of thousands of people, many of them women who took time out for childcare or other reasons. Some of these women were subjected to the State's marriage bar - which was only abolished in 1973.

Pensions are currently calculated using a 'yearly averaging' system. This means it is possible for people to start paying PRSI later in their working life and still qualify for the maximum rate.

The anomaly arose where people started work, but then took time out. The 2012 system did not take into account a break in a person's employment if they stopped working to raise a family or to care for a loved one.

Meanwhile, Fine Gael and Fianna Fail are set to clash again over social welfare payments during the forthcoming round of budget negotiations.

Yesterday, Mr O'Dea confirmed he would be seeking a €5 increase in the State pension when budget talks begin and insisted he would not allow Fine Gael to use Brexit as an excuse for not increasing payments. "You can't make the poor poorer because of Brexit," Mr O'Dea said.

However, his comments follow the publication last week of Department of Finance tax strategy papers which warned against increasing weekly social welfare payments including the pension by €5 per week.

"Given that available expenditure resources are likely to be limited in the forthcoming Budget, it should be noted that across-the-board increases in the weekly rates of payment are very expensive," it said. "In addition, payment levels on most welfare payments are currently at or above the benchmark levels proposed in various studies."

Increasing the state pension by €5 per week would cost €165m, according to the document.

Sunday Independent

Editor's Choice

Also in Irish News