No back pay on pensions anomaly despite ‘fix’
■ No back payments – and minister warns top-ups for 40,000 could limit other social welfare hikes in 2019
PENSIONERS who are missing out on up to €40 a week because of an anomaly in the system must wait another year to see the money, despite a ‘fix’ being put in place.
The Government will also be giving “absolutely no consideration” to the idea of offering back payments for the past five years.
Social Protection Minister Regina Doherty secured Cabinet approval for new legislation that will end the infamous “bonkers” system from March 30 at a cost of €40m.
However, as no money has been allocated for the scheme this year, more than 40,000 people will have to wait until 2019 for the full entitlement to be restored.
The move will also limit the potential for the Government to top-up other social welfare payments, including the standard old-age pension, next year.
The anomaly was created by changes to the system used to calculate pension payments made in 2012.
Pensioners who left the workplace for a period were penalised by a system which averaged out their PRSI contributions.
PENSIONERS missing out on up to €40 a week because of an anomaly in the system will not see their money until next year despite a ‘fix’ being put in place.
The Government will also be giving “absolutely no consideration” to the idea of offering back payments for the past five years.
Social Protection Minister Regina Doherty secured Cabinet approval for new legislation that will end the “unfair” system from March 30 at a cost of €40m.
However, as no money has been allocated for the scheme this year, more than 40,000 people will have to wait until 2019 for the full entitlement to be restored.
The move will also limit the potential for the Government to top-up other social welfare payments, including the standard old-age pension, next year.
“It not coming from this year’s budget. It will form part of the deliberations with Paschal [Donohoe] this September or earlier if the budgetary process starts earlier for me,” Ms Doherty said. “It does mean that we might get less money for other stuff this year but this is an incredibly important issue, particularly given that people who have less contributions in some cases are getting a higher pension than people who have longer histories of contributions. That was, and is, unfair.”
The anomaly was created by changes to the system used to calculate pension payments made in 2012.
Pensioners who left the workplace for a period of time were penalised by a system which averaged out their PRSI con- tributions from the date of their first employment to their retirement. No account was taken of the fact many women were forced out due to the marriage bar, which was in place until 1973.
Ms Doherty is now moving these people onto a total contribution approach (TCA), which means total PRSI payments will be the key factor in deciding entitlements rather than yearly averages.
She is also introducing a new ‘Home Caring Credit’ which will give special dispensation to people who spent up to 20 years outside the workplace in order to raise children or take care of a relative.
The minister said her officials would be accepting bona fides when it came to verifying if people qualify for this credit.
She said her department would draw on a “tremendous amount of information” already available, including records of childcare payments, respite grants and carers’ allowances.
“There will be some cases where we might have full information so people will be able to make a statutory declaration as to whom they are making the claim on the basis of caring for,” she said.
Fianna Fáil’s social protection spokesman Willie O’Dea said he would be “churlish not to welcome the U-turn”.
However, he expressed a number of reservations and said it was disappointing payments won’t start until next year.
“While the changes announced will rectify some of the grievances many women have, they will be of little benefit to men who were affected by the 2012 rule changes,” he said.
“Approximately 40pc of those impacted by the reduced band rates in 2012 are men and I am concerned that they will not benefit from the new Home Caring Credit.”
Head of advocacy with Age Action Justin Moran also said he was “disappointed” that the pension cuts in 2012 won’t be simply reversed.
“But we appreciate that Minister Doherty’s solution can make a very real difference in the incomes of thousands of men and women who were punished by the pension system for rearing their families,” he said.