Government needs ‘roadmap’ to rectify pension imbalance

FF says women losing out on payments due to ‘bonkers and unbelievable’ anomaly

The Government needs to set out a "roadmap" to deal with an anomaly in the pension scheme that sees thousands of women losing out on payments, Fianna Fáil has said.

The call from the main Opposition party, whose abstention is needed to pass the budget, comes after Minister for Finance Paschal Donohoe described the anomaly as "bonkers and unbelievable".

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

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. It also affected others who had taken up part-time work or had a summer job.

Mr Donohoe has said it would cost “hundreds of millions” to rectify in one budget and the Government now says “any changes to this system are complex and potential impacts need to be properly thought through and costed”.

New approach

Minister for Employment and Social Protection Regina Doherty is working on a new approach to pensions, a Government spokesman said, and will make proposals later in the year.

“It is then intended to have a public consultation and this will provide an opportunity for people to submit their views on the proposals.”

Fianna Fáil finance spokesman Michael McGrath, however, said the Government had been “procrastinating” on the issue for some time.

“It is an issue that progress needs to be made on. The people who are affected want to see a roadmap back to being treated equally based on their contributions.”

No change is anticipated in the immediate term and any further measures are likely to be an issue for next year’s budget.

Labour’s Joan Burton defended changes made to the pension system while she was minister for social protection on the basis that the system had to be saved at a time of austerity.

Ms Burton said the Government could help those affected by increasing payments to them over a number of budgets, beginning with the forthcoming Social Welfare Bill.

Tánaiste Frances Fitzgerald also answered questions on the issue in the Dáil yesterday.

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

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

Pension provision

“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 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.