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Tuesday 19 June 2018

'Winners and losers' under State pension rules but no timeline for reform - Regina Doherty

Social Protection Minister Regina Doherty Photo: Tom Burke
Social Protection Minister Regina Doherty Photo: Tom Burke

Kathy Armstrong

The State pension system isn't "kind" to an estimated 40,000 people but there are no guarantees abut when anomalies will be rectified, Social Protection Minister Regina Doherty has said.

The current State pension is calculated by your PRSI contributions divided by the number of years you work but around 40,000 people are being disadvantaged - for example, parents who might have taken career breaks to care for their children or those who had part-time work.

Ms Doherty said on RTE Radio One's Morning Ireland that she is looking at reforms but she claims that the system is "fair."
She said: "The pension system is the most fair it has ever been.

"In every complex system there are winners and losers and in this system there is an anomaly that disadvantages a very small number of people relative to the large number of pensioners that we have.

"That's not new and it has been recognised from as far back as 2010.

"In essence, it's not fair to say that the current pension system that we have isn't fair as it's the fairest it has been.

"That's not withstanding that there are 40,000 people who because of the averaging rules and the length of their working lives are probably being treated unfairly compared o some other people."

She continued to say: "The system isn't kind to them, this isn't new and it's something we have all recognised.

Stock image
Stock image

"The National Pensions Framework recognised in 2010 that there are women affected by the changes of the band, there were going to be a small number of people affected and that government decided not to mitigate that."

Read More: Millions of workers do not pay into workplace pension, says watchdog chief

She said that the process of looking into overhauling the system will begin this year but it's not yet known when the possible changes would be enforced.

Minister Doherty said:  "It will be changed but only for new entrants as you can't go back to someone who is currently enjoying a pension of €230,000 and say it will be taken off them, categorically that cannot happen...

"What we're doing at the moment - and what I hate to say is that it's very complex - is that when you tinker with a pension system to fix one thing an anomaly will likely spring up somewhere else

"I'm adamant that when we fix this another unintended consequence will spring up somewhere else.

"I can't say yes and I can't say no - I'm not trying to ambiguous but I genuinely don't know how much it will cost or how many more people will come down the line."

Read More: Groups urge Dáil to reverse 'unfair' cuts to pensions

The Fine Gael representative defended these pension reforms not being in the budget, as she hit out at criticism from Fianna Fail.

She said: "The reason it didn't appear in budget negotiations was because of the volume of money it will cost to rectify this.

"Given that Fianna Fail took credit for everything that was in the social bill, you might ask them why they didn't get what they asked for.

"I'll leave it at that and people can make up their own minds.

"I'm saying that Fianna Fail can't be trusted - they can't be trusted with the economy or with the sincerity of what they are saying to people.

"This situation has been recognised by me and by people in my department because they have brought it up with me on numerous occasions."

Fianna Fail's Willie O'Dea hit out at Ms Doherty's comments and urged Taoiseach Leo Varadkar to distance himself from them.

Speaking on The Sean O'Rourke Show on RTE Radio One, Deputy O'Dea said: “I resent Regina Doherty’s remarks that Fianna Fáil can’t be trusted.

"Fianna Fáil has adhered faithfully to the confidence and supply agreement for the past 18 months, often in the teeth of opposition and upset from our supporters who would prefer if we brought down the government."

The Limrick representative said: "It ill-behoves a minister who is a beneficiary of that to make a statement like that. I would ask Regina Doherty to reflect on that statement…

"She was happy enough to trust us to vote her into office and keep her in office for the past 18 months.

"I would ask the Taoiseach to disassociate himself [from these remarks]."

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