FF urges use of surplus State money for pensions

Any spare money found by the Government should be used to help solve the pension anomaly that sees tens of thousands of people receive less than the statutory weekly rate, Fianna Fáil has said.

The party's public spending spokesman Dara Callearyhas written to Minister for Finance and Public Expenditure Paschal Donohoe saying any money saved should be used to solve the problem.

In a letter, Mr Calleary said money could also come available through the Social Insurance Fund, which he said “is calculated to be in €1 billion surplus in 2018”. He said his party would support any efforts to change the scheme, even before next year’s budget.

The issue of the pension anomaly arose after last month's budget and Minister for Social Protection Regina Doherty is understood to be examining ways of solving it in the near-future.

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Fine Gael backbenchers called on her to act at a recent meeting of their parliamentary party. Some Fine Gael TDs have said privately that it is important for the party to proactively rectify the situation rather than be forced to do so, which would be politically damaging.

Government sources expect Ms Doherty to implement some changes in the coming weeks.

Pensions cut

Following changes introduced by the government in 2012, the pensions of about 36,000 older people were cut by hundreds, even thousands, of euro each year, according to Age Action Ireland.

The State pension is calculated by adding up the total number of PRSI contributions a person makes and then dividing that by the number of years between when a person started work and when they retired.

However, many older women are punished by this system because they took time off work to raise a family, during which time they will not have paid contributions. It also affected others who had taken up part-time work or had a summer job.

While it would cost hundreds of millions to fully backdate the changes to the scheme, Ms Doherty’s spokesman said changing the pension rate for those affected would cost €73 million next year and €85 million in 2019.

“The current controversy has been misleadingly referred to as the ‘women’s pension’ issue,” the Minister’s spokesman said. “Just under 62 per cent of those affected are women, and just over 38 per cent are men.

“The new rate bands are in place since September 2012. The most recent figures available show that there are approximately 42,500 people who are receiving a reduced rate pension as a result of the rate-band calculation changes implemented in 2012.”

Fianna Fáil social protection spokesman Willie O’Dea, however, has said the change would cost less if it was made in the spring, rather than in January, like all other welfare measures outlined by Mr Donohoe in October’s budget.