US and Canada residents claiming Irish State pension hit with extra charges

Recipients of the Irish State pension living in the US and Canada have experienced a sharp increase in the cost of receiving their benefit, due to a change in banking provider by the Department of Social Protection.

The move follows a switch by the department from Bank of Ireland to Danske Bank, a process which is ongoing, following the Government's decision in 2017 to tender for a single banking service for all Government departments and offices.

While the department wrote to all such pension beneficiaries in January, informing them of the potential of charges being levied on their payments, the cost of the fees are now hitting home. It is understood that there are about 6,400 pension recipients in the US or Canada receiving an Irish pension payment.

Someone who has worked in Ireland, as well as a country with which Ireland has a bilateral social security agreement, such as the United States, can combine their contributions to help them qualify for a contributory State pension. Similarly, Irish contributions can be used to help them qualify for a pension where they live.

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‘Not good enough’

One Canadian-based reader has complained to The Irish Times of being hit with a charge of $17 (€11.33) per payment. On a full State pension, of €248.40 a week, this results in a 4.6 per cent decline in the payment. However, many of those qualifying for pension benefits and living abroad may not qualify for the full payment. For example, someone with a weekly payment of €99.20 (based on 10-14 yearly PRSI contributions) would see 11 per cent of their payment now go on charges.

Toronto resident Colm Murphy (66), from Goatstown, Dublin, said previously his pension was paid at no cost him. Mr Murphy, who worked in Ireland for 13 years, said the fee of $17 was taken out of his pension payment in March and the same amount again in April. Describing himself as a “disgruntled pensioner”, the retired banker said: “I did not work to earn a pension to have part of it go to service charges to a bank’s coffers... It is not good enough.”

Having discussed the issue with other Irish pensioners in Toronto, he said there are “a lot of people here who are upset”.

Cross-border payment

The change arises because when Bank of Ireland made the payments, it did so on a direct deposit basis, with no charges arising. The move to Dankse Bank however, has also resulted in a move to increased charges.

According to a spokeswoman for Danske Bank, payments to overseas recipients, in countries where the sending bank (in this case Danske Bank) is not a member of that country’s domestic clearing system, are processed as cross-border payments (international wire transfers).

“This is a standard, globally recognised method of processing international payments,” the spokeswoman said.

But in order to effect these transfers, in some countries such as Canada or the US, the services of local correspondent banks may be needed – and these may levy cross-border payment charges.

A spokesman for the Department of Social Protection said that it “ continues to liaise” with Danske Bank on the matter, while Danske Bank is also in contact with its correspondent banks on the issue.