State acts to remove pension anomaly penalising 40,000 people

‘Home caring credit’ to restore pension levels but retrospective payments ruled out

Minister for Social Protection Regina Doherty announced that many of those affected by 2012 pension rule changes will be entitled to a new credit that will restore their pensions to pre-2012 levels. File photograph: Dara Mac Dónaill/The Irish Times

Minister for Social Protection Regina Doherty announced that many of those affected by 2012 pension rule changes will be entitled to a new credit that will restore their pensions to pre-2012 levels. File photograph: Dara Mac Dónaill/The Irish Times

 

The State plans to restore payments to many of the 40,000 people who lost up to €1,500 a year under a 2012 rule that changed the way pensions were calculated.

Minister for Social Protection Regina Doherty announced that many of those affected will be entitled to a new credit that will restore their pensions to pre-2012 levels.

However, the proposals outlined by the Minister immediately met with criticism, as the new payment system will not operate retrospectively, and those who lost out since 2012 will receive no back payments for the losses they felt they incurred.

The Minister defended the decision on grounds of costs and on the fact that legislation cannot be operated retrospectively.

The main feature is a “home caring credit” which will give those who left the workforce a credit for the contribution they made as carers at home. The credit can be claimed for a period of up to 20 years.

The anomaly had seen women and men who took time out of the workforce hit with reduced State contributory pensions following changes introduced by the Fine Gael-Labour coalition.

Left disadvantaged

Tens of thousands of people, many of them women who left the workforce many years ago to raise families, were left disadvantaged by the manner in which their career contributions were calculated. Many of those left the workforce before 1994. 

The initiative is expected to cost €40 million for 2018 and more in succeeding years. However, while the new total contributions calculation will take effect from March of this year, the first payments will not be made until the first quarter of 2019.

Those affected will be contacted later this year and do not need to contact the department.

It is also understood that not all of the 40,000 will be able to benefit from the new scheme, which will have statutory backing. For example, those who went abroad – many of whom would have been men – may not be entitled to claim the credit.

Department officials were not in a position to say how many would benefit, but it is understood the figure may be as low as 27,000.

Outlining the scheme, Ms Doherty said the home caring credits would be equitable. 

“The period of time over which a person paid social insurance contributions will no longer be a key determining factor in a pension calculation.”

She said the State would accept a statutory declaration for those for whom there was a lack of records. “We will accept their bona fides,” she said. 

She said the changes would take effect from March 30th, 2018, which she said was the very earliest she could have introduced them, with the first payments being made in 2019.

Fianna Fáil’s social protection spokesman Willie O’Dea said it would be churlish of him not to welcome some of the changes.

He criticised the delays in making actual payment, and also the fact there would be no back payments. He also said that about four in 10 of the affected group were men. “I am concerned they will not benefit from the new caring credits.”