‘People losing out over pension anomaly’
THE injustice that was introduced with the 2012 changes to the Contributory State Pension eligibility needs to be addressed as quickly as possible, Cork Fianna Fáil Deputy Aindrias Moynihan told the Dáil.
Every week, he said, people are losing out on income and every week more people are being hit by those cuts.
“I recognise that the Minister has prepared a report on it,” he said. “We need a clear timeline and roadmap for how things will be corrected. It needs to happen sooner rather than later.
“I understand that the report will be brought to the Cabinet sub-committee.
“When the Minister requested that report, did she focus only on the people who will become eligible in future or did she also focus on the people who have already been hit by these cuts going back to 2012?” he asked.
“In requesting that report, did she also ask for homemakers to be taken into consideration? A clear roadmap needs to be set out in the interests of those hit by the 2012 cuts.”
In response, the Minister for Employment and Social Protection, Regina Doherty said the current rate bands applying to the State Pension (Contributory) were introduced in 2012, replacing the previous rates introduced in 2000.
“The 2012 rate bands more closely reflect the social insurance contributions history of a person than those in place between 2000 and 2012,” she said.
“The current rate bands still provide pensions to people which are not proportionate with their level of contribution. For example, a person with only 20 years of contributions over a 50-year working life will still get an 85% pension.
“It is estimated that, to revert to the previous bands from January 2018, would result in an annual cost of well over €70 million extra in 2018, and this annual cost would increase by an estimated €10 million to €12 million each year thereafter.”
She said the National Pensions Framework proposed that a total contribution approach should replace the yearly average approach to the calculation of the State pension (contributory) from 2020.
“I hope to start a consultation process regarding this reform shortly,” she said. “Following the consultation period, a proposal to Government will be submitted seeking approval of the new approach.” to examine business insurance costs. The process is under way, but the group has not yet reported. When it does, we will take the same approach that we took to the cost of motor insurance, namely, making sure we implement the recommendations made.”