Monday 26 February 2018

Welfare Minister is under new pressure to fix pensions shortfall

Fianna Fáil spokesman on welfare Willie O’Dea. Picture: Collins
Fianna Fáil spokesman on welfare Willie O’Dea. Picture: Collins
John Downing

John Downing

Social Protection Minister Regina Doherty will come under renewed pressure to bring forward a speedy remedy for pensioners who are on reduced payments because they took time out of the workforce.

The issue already affects 35,000 people, mainly women who took time out of the workplace to rear their families. Some of them receive as much as €1,500 per year less in pensions.

But Fianna Fáil's welfare spokesman Willie O'Dea has said the numbers involved were continuing to grow and that some pensioners were dying without receiving a timely remedy.

"We are dealing with pensioners here," he said. "They do not necessarily have years and years to await a reasonable remedy for an injustice and the Government's nebulous indications of a timescale are just not acceptable."

Mr O'Dea said Ms Doherty was to receive a report on the issue by January 18 and he had already ensured that this would be published. He will then seek an indication of how and when a remedy can be framed.

Changing the rules back to full pension rights would cost €70m in 2018 and an extra €10m per year thereafter. Back money is estimated at anything up to €300m.

The Taoiseach has already said it could be "quite some time" before the Government can take steps to correct the major pensions anomaly.

Speaking some weeks ago, Leo Varadkar said the system which has left some pensioners up to €30 per week out of pocket would not be fixed until 2020. He told the Dáil that the Government was trying to bring in "interim measures" before then but did not have costings on them.

The Social Welfare Bill, which was approved late last year, does not include measures to tackle the issue. In November, Ms Doherty said she would be bringing a memorandum to Cabinet on the matter - but that did not materialise.

The problem arises from rate band changes in 2012 and alterations to the homemaker's scheme. These led to people being denied a full state pension because they had not built up enough contributions during their working life.

Women

Matters were compounded by married women being barred from working in the civil service until 1973. Many of these women lost their cover under the social welfare system when they were obliged to resign upon getting married.

This meant they either did not qualify for a state pension or qualified only for a smaller one.

Mr Varadkar said some weeks ago: "The situation will be rectified by 2020, when we will introduce the new total contributions approach. It will not matter when a person made his or her contributions. What will matter will be the number of contributions made over the period of someone's working life."

Since 2012, pensions are calculated on an "average PRSI contribution per year basis". The reference period starts from the first day of the PRSI contribution and ends on the day that a person reaches retirement age.

An average of 48 contributions per year yields a 100pc pension. But since 2012, people with an average of 20 to 29 contributions only get 85pc.

A survey last February showed 35,000 people - 23,000 of them women - are affected. The number is growing as more people reach retirement age.

Women are especially hit where they left the workforce to raise a family or care for a sick relative.

Absence from work dilutes their average yearly contributions.

A 'disregard scheme' allows mothers and carers a 20-year exemption. But it only applies from 1994.

Irish Independent

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