‘Bonkers pension bias’ will be fixed
Anomaly left 35,000 people with lower payments
THE Government has pledged to end what Paschal Donohoe has branded the ‘bonkers’ anomaly that leaves 23,000 women with lower pensions – but it won’t be fixed until 2020.
The current system for calculating the contributory State pension measures how many PRSI contributions, or ‘stamps’, a worker has made in their lifetime, then divides by the number of years they have been in the workforce.
In order to get a full State pension, they need to have made a minimum 48 PRSI payments per year.
This system was introduced in 2012 but has meant that 35,000 people currently don’t qualify for a full pension, 23,000 of whom are women.
Many of them had to leave the workforce because of the public service ‘marriage bar’, or to look after their children.
On average, those affected are missing out on €35 a week, and won’t benefit from the €5-a-week pension hike unveiled in this week’s budget. Yesterday, Tánaiste Frances Fitzgerald pledged to end the disparity for new pensioners by 2020, but said fixing the anomaly would cost up to €300million.
The Minister for Business, Enterprise and Innovation said: ‘It is estimated that to revert to the previous bands from January 2018 would result in a cost of more than €60million in 2018, which would increase by an estimated €10 million in each following year. It would be expected to cost some €70million in 2019.’
If backdated, this would reach about €300million, she said, adding: ‘Clearly that is a huge sum of money to be found in the current context.’
However, Fianna Fáil TD Niall Collins said men and women were being ‘blatantly discriminated against because they were not in the workforce for a number of years’.
He added: ‘The years they were not in the workforce are being used to average down their contributions. There is nothing complex about that.’
Sinn Féin deputy leader Mary Lou McDonald slammed the Government, saying it knew full well the consequences of the 2012 law change and were continuing to discriminate against women.
She said: ‘[Paschal] Donohoe, has described the situation as bonkers and unbelievable. What is really bonkers and unbelievable is that he drafted and announced a budget on Tuesday that does absolutely nothing to rectify this matter.’
But yesterday, Mr Donohoe denied ever having pledged to tackle the situation, saying: ‘I had never created the expectation in the run-up to this budget that this was going to be a matter that I was going to be able to deal with.’
In a statement yesterday, the Department of Social Protection confirmed that a ‘total contribution approach’ would replace the ‘yearly average’ by 2020, but it was ‘not envisaged’ that this would retroactively apply to current pensioners. The decision not to change the system has been criticised by the National Women’s Council of Ireland, which is calling for the payments to be fully backdated.