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Friday 20 September 2019

Pensions, free travel and medical cards on IMF hitlist

Finance Minister Michael Noonan must still save billions in the next three Budgets even if the economy grows as quickly as the Government hopes

Thomas Molloy and Charlie Weston

Pensions, free travel and medical cards for the over-70s are being targeted for new cuts.

The International Monetary Fund (IMF) now has pensioners in its sights as it believes they have largely escaped the effects of austerity.

The key provider of our bailout cash has told the Government to look at saving money by scrapping some free schemes for the elderly.

It warns that these benefits are wasteful because they benefit rich and poor alike.

Among the schemes are cheap electricity, gas and television licences, plus free travel passes and medical cards.

The proposals carry all the more weight because they are in a report that accompanied the IMF's latest €3.2bn tranche of bailout cash released to the Government this week.

But ministers will blanch at the prospect of sparking another 'grey revolt' by cutting any schemes for the country's 480,000 pensioners.

Backbenchers and ministers will vividly recall the massive protests that forced a Fianna Fail U-turn on cutting medical cards for the elderly in 2008.



However, the raft of benefits for the elderly is rare in western economies and the IMF says the challenge of looking after them is getting greater all the time.



It points out that:



- The number of old people is rising by 3pc a year.



- Payments to the elderly have risen by 20pc since the economy collapsed in 2007.



- About 2pc of economic output goes on universal benefits.



While the Government does not have to follow the IMF's report, it could come under strong pressure later this year if economic growth comes in lower than expected. Figures on Exchequer spending also released yesterday showed the economy remained broadly on track.



But Finance Minister Michael Noonan must still save billions in the next three Budgets even if the economy grows as quickly as the Government hopes.



Free television licences, cheap electricity and phone calls, different tax rates and free health care for the over-70s are just some of the benefits that are rarely enjoyed elsewhere.



The IMF admits that our relatively generous pensions and social welfare benefits have helped prevent poverty since the economy collapsed. The poverty rate has remained relatively flat since the bust thanks to little changed pensions, child benefits, mortgage and rent allowances and medical cards.



Target



But the economic organisation also points out that these benefits have cost the State large amounts of money.



Irish citizens have enjoyed the largest increase in welfare spending in Europe. It now claims more than half of government revenue compared to a third in 2007.



The state contributory pension is still €230 a week and was not cut in recent Budgets, unlike other social welfare benefits such as child benefit and dole payments.



The Washington-based organisation now wants more means testing to target those who need help, rather than the current system, which does not differentiate between needy and wealthy pensioners.



The Central Statistics Office calculated recently that only 9pc of households where the adults were aged over 55 have had to make cutbacks – such as spending less on groceries, clothing and footwear, health insurance and going out. Meanwhile, almost a third of those between the ages of 35 and 44 have had to make cutbacks.



And despite recent changes that have impacted on pensioners’ money, they still get 1,800 units of free electricity, which saves around €291 a year.



They also get a natural gas allowance of €48 every two months in the summer and €102 every two months in the winter, a free TV licence, and a telephone allowance of €22.58. Free travel is available on Iarnród Éireann, Bus Éireann, Dublin Bus, Dart and Luas Services.



Age Action Ireland moved swiftly last night to reject the IMF’s claims that older people had escaped cuts in the last few austerity Budgets. “The state pension was not hit directly, but older people have been impacted in lots of other ways,” its chief executive, Eamon Timmins, told the Irish Independent.



“Older people are very, very worried. They are looking at the introduction of the household charge, water charges and there is nothing they can do because they are on a fixed income,” he added. He said pensioners must now pay the universal social charge, have lost their Christmas bonus payment, and get less free electricity.



He added that there had been a reduction in medical card cover for dentistry, an increase in VAT, and an increase in DIRT tax on savings.



Mr Timmins admitted most people with public sector pensions were comfortable but said the average pension for those with a private pension was just €6,000.



Irish Independent

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