How did thousands of women lose out on their State pensions?

Q&A: Grievance relates to ‘bonkers law’ that forced women out of jobs decades ago

There’s a lot of talk about women being denied full pensions in the budget. Is this something new?

Not at all. In fact, it's a grievance that goes back decades and relates originally to the marriage bar that forced thousands of women out of their jobs in the Irish public sector and other private companies, like the banks, when they got married.

It also affects a lot of women who took time out of work to raise a family or care for relatives.

And was this supposed to be addressed in the budget?

It didn't feature in the budget and it was never expected to. The issue reared its head when Minister for Finance Paschal Donohoe took questions on a radio show the morning after the budget.

But didn’t he say it was “bonkers”?

He did. Referring to the marriage bar, he said: “That was a bonkers law.” He added: “The way those women were treated was wrong. We’re doing what we can to rectify that.”

So what is he doing?

Well, nothing. He says he doesn’t have the money that it would take to put it right – about €290 million.

I’m confused. Why are these women being denied pensions in the first place?

Because they left or were forced out of the workplace for a large number of years, they do not have the minimum number of PRSI “stamps” or contributions to qualify for a full State pension. Some may not qualify at all.

That all sounds messy. How do they work it out?

The rules on the State pension are quite rigid. In simple terms, to determine whether you qualify, the Department of Social and Family Affairs tots up the number of PRSI payments or “stamps” that you have paid, or had credited , during your working life. They then divide the number of stamps by the number of years you have worked.

And what then?

In order to get a full State pension, you need to have paid a minimum of 520 contributions over your working life, as well as an average of 48 PRSI payments per year. People with a lower average can get a reduced pension as long as they have an average of at least 10 payments a year .

And they count the time you were not even in the workforce?

They count everything. If you take a student job at 18, they will count every year from then until you retire regardless of breaks you might take. With the retirement age now 66, that’s 48 years. You’d need to have worked at least 10 full years to meet the minimum 520 contribution threshold – and over 44 years to get a maximum pension.

Aren’t women given a PRSI “holiday” for raising a family?

They are now, but that only came in in 1994. Since then, women can discount up to 20 years of their working lifetime to raise children – removing those years form the averaging formula. Anyone raising kids before 1994 lost out.

How many people are affected?

It’s difficult to say. The National Women’s Council of Ireland, which has campaigned fairly tirelessly on their behalf, figured back in 2007 when they were mulling a legal challenge that as many as 130,000 women were affected altogether. Other figures suggest the number affected by the marriage bar alone is about 47,000.

But if they were working in the public sector, they wouldn’t have been getting the State pension anyway?

That’s quite true for most of them. Public servants employed before 1995 were not entitled to the State pension, although they did receive a public-sector pension. Clearly, a woman forced to give up her job early in her career under a marriage bar would not have much public sector pension entitlement built up.

And, of course, many women were forced out of private-sector jobs too, especially in the banks.

And what happened in 2012? I keep reading about changes then that made things worse.

Two things happened. First, the minimum number of contributions new applicants for a pensions were required to have doubled to 520.

Second, even more importantly for women, a number of new bands for reduced contributions were introduced – effectively cutting up to €30 a week of the State pension that some people had expected to receive.

Between them, these measures were projected to save the exchequer €45 million a year. But, according to Age Action, it means more than 22,000 women were worse off by up to €1,500 a year.

Why not reverse these measures at least?

Tánaiste and Minister for Business, Enterprise and Innovation Frances Fitzgerald said in the Dáil on Tuesday that reversing the changes would cost €60 million next year and €10 million a year thereafter. Paying back the money involved could cost €230 million, she said.

She said, however, that the issue was being studied as part of an overall review of women’s pay and access to pensions. She said there would some recommendations later this year and a change in the method of pension calculations would be implemented after 2020, though she didn’t say what that would be.