Reversing pension changes would cost €60m next year, Tánaiste says

Dáil told women mainly affected by 2012 cost-saving changes to State pensions

Tánaiste Frances Fitzgerald said paying the money back would cost an estimated €230 million. Photograph: Dara Mac Dónaill / The Irish Times

Tánaiste Frances Fitzgerald said paying the money back would cost an estimated €230 million. Photograph: Dara Mac Dónaill / The Irish Times

 

Reversing changes to the State pension introduced in 2012 would cost €60 million next year and a further €10 million annually, Tánaiste Frances Fitzgerald has said.

She said paying the money back would cost an estimated €230 million.

“I am acutely conscious of the problems women are experiencing in accessing adequate pension provision,’’ she added.

Ms Fitzgerald told the Dáil on Thursday the issue was being studied as part of an overall review of women’s pay and access to pensions.

There would be some recommendations later this year and a change in the method of pension calculations would be implemented after 2020, she added.

The Tánaiste was replying to Fianna Fáil’s Niall Collins and Sinn Féin’s Mary Lou McDonald who highlighted the case of 35,000 pensioners, two-thirds of whom are women, who have had their pensions cut by as much as €1,500 a year because of the 2012 changes.

Mr Collins said Minister for Finance Paschal Donohoe had described the situation as “bonkers and unbelievable’’.

Ms Fitzgerald said the Minister had been referring to the marriage ban which, until the early 1970s, required women to resign their civil service jobs on marriage. Customary practice was that they also resigned from jobs elsewhere upon marriage.

The State pension is calculated by adding up the total number of PRSI contributions a person makes and then dividing that by the number of years between when a person started work and when they retire.

However, many older women are punished by this system because they took time off work to raise a family, during which time they will not have paid contributions.

Gender-based inequality

A briefing document from the Age Action group earlier this year state cites an example of an individual who worked for a few months in 1968 and then left the workforce to raise a family before going back to work in 2000.

“The average number of pension contributions would be divided by 48 (the number of years between 1968 and 2016).

“In effect, the weekly pension rate would be much higher if the individual had not worked that summer in 1968.”

Because of changes introduced by the Government in 2012 the pensions of about 36,000 older people were cut by hundreds, even thousands, of euro each year, according to Age Action.

Mr Collins said Age Action Ireland had been lobbying on an issue which was a gender-based inequality in the main because it impacted on women mostly.

“Bear in mind, a lot of women took time out of the workforce to rear their families, look after sick relatives, elderly parents and look after their homemaking responsibilities,’’ he added.

Ms McDonald said the women being discriminated against had been led to believe there was unanimous support for the reversal of the 2012 changes.

“That is what needs to happen, Tánaiste,’’ she added.

Ms Fitzgerald said an important element in the final design of the scheme would be the position of women who had gaps in their contribution records as a result of caring duties.

“That factor is, of course, being considered very carefully in terms of developing this reform,’’ she added.