Same old story? Not likely this budget
Benefits to pensioners have increased by 20 per cent in Ireland over the past five years, drawing criticism from the IMF and making them an obvious target for Government cost-cutting
With December’s Budget advancing, speculation is mounting as to how the Government will reach its €3.5 billion adjustment. While cuts in spending will be one element of its strategy, reducing benefits is also likely to figure prominently.
Heretofore a protected species, pensioners might end up in the firing line, especially given the assertion of the International Monetary Fund (IMF) earlier this year that benefits to pensioners in Ireland are too generous, having increased by 20 per cent since 2007.
Pensioners are currently entitled to a range of benefits, including the living-alone allowance, the national fuel scheme, supplementary welfare allowance and treatment benefit. But which ones are most expensive and therefore most likely to be cut?
Introduced by Charlie Haughey during his term as Minister for Finance in the late 1960s, pensioners have since had the right to travel at no cost on buses, trams and trains. Those aged 66 and over who qualify for a State pension are automatically entitled to such a pass.
If incapacitated, they might also be entitled to a companion pass, which allows someone to travel with them, also free of charge.
In September, the Government announced a working group was reviewing the scheme. Abuse such as that highlighted recently by Irish Rail – which has issued 1,300 fines so far this year for misuse of the pass – is a key issue.
The scheme costs the Government €77 million a year, covering 726,000 pensioners, or as many as 1.1 million when companion passes are included.
* Cut the scheme altogether and make pensioners pay for their travel. However, doing so would be unlikely lead to a boost in revenues for operators such as CIÉ, given that pensioners’ travel tends to be discretionary rather than necessary.
* Introduce a flat fee for use of the scheme.
* Means-test the pass.
* Reintroduce peak-hour travel restrictions: pensioners would have to pay to use public transport during peak hours.
Of all the benefits pensioners currently receive, the medical card – to which about 95 per cent of those over the age of 70 are entitled – might be the most contentious. In 2008, the previous government tried to row back on its universality, only to find itself enmeshed in a “grey revolt”. It later backed down and introduced a generous means test, but after the furore it caused, this Government will be loathe to raise the issue once more.
* The IMF would like to see a standard means test across all age spectrums. This would push more pensioners out of the eligibility bracket, as the means test would be lower than the current income of €700 a week (or €1,400 for a couple), and reduce costs for the State. An alternative is to introduce more graduated medical-card coverage, such as a GP-only card.