As the debate over pensions heats up, tension is mounting between the supposedly cushioned retirees and the jobless despairing young. But it's not as simple as the untouchables versus the trapped, writes KATHY SHERIDAN
LONG, LONG ago, dinner-party etiquette decreed that politics and religion were much too incendiary for polite discussion. Now the surest way of hurling a verbal hand grenade into any proceedings is to say “pensions”. Or “teachers”. Or “guards”. Or, for a proper spectacular, “Jim McDaid”.
Though he resigned his Dáil seat only last week, McDaid’s extraordinary retirement package has become the standard against which the budget’s fairness will be measured: phased lump sums totalling more than €250,000 over the next 12 months, plus an annual pension of €75,000 thereafter.
Last May, in a letter to the Editor of The Irish Times, Dr Thomas Farrell lambasted the over-50s, who he said had destroyed this country and "now see no problem in bankrupting the young to pay for their retirement. The average teacher with an honours degree can retire at the age of 60-65 and receive a net monthly pension of approximately €2,700. A school principal could expect to retire earning €3,500 net per month. In contrast, a 26-year-old public servant working as an executive officer will only take home about €2,150 per month" – but with it would have to fund a mortgage, rent, transport and the expense of having children.
A few weeks ago Peter Preston, a former Guardian editor and now a columnist, wrote of the “lucky ones” like himself, the ones who have had their pensions “made and paid pre-crunch; we bought our first homes long ago when houses came cheap; we emerged from university without debt; we found jobs easily enough in the Sixties, because there were jobs for people like us. We are the famous grey panthers, still on the prowl and, it seems, a protected species. Take any stock list of what’s ‘fair’ and what’s not and we are the winners by miles.”
These winners would be out “in overwhelming force again this week, now school half-term’s over”, he wrote. “We shall teem around London’s Stansted airport, eat English breakfasts in country hotels, plod the gardens of stately homes, block book National Theatre matinees.”
With little research to base it on, the same is said of retirees in Ireland: that they are the ones most likely to be found in good hotels or crowding on to the sun-bound flights midweek; dressed up for a leisurely dinner; crowding around stately homes.
Gerard O’Neill of Amárach Consulting suggests the generation recently retired is indeed “a very lucky one . . . almost all with defined-benefit pensions and no mortgages . . . They have huge power and are a very active political power, because they are far more likely to vote. No politician can afford to alienate them . . . But that’s going to create an intergenerational tension; that’s going to come more and more to the fore in the next election.”
So. A straightforward matter of powerful, cushioned retirees versus the impoverished, jobless despairing young? The untouchables versus the trapped. An ideal political climate, surely, in which to target State pensions. The problem, as always, is that retirees are not a homogenous group.
They include the worry-free, “gold-plated” backbenchers, teachers and early-retiree gardaí who bring up the average. They also include index-linked, high-ranking civil-service retirees who now earn more in retirement than they did in employment.
But this week Eamon Timmins of Age Action told the joint committee on social protection that nearly 50 per cent of older people relied on income in the bottom third of income groups, with incomes in and around the poverty line. Just 5 per cent of older people have incomes in the highest income group, compared with 12 per cent of those of working age.
“Despite being presented as winners of recent budgets, since 2008 the medical card has been means tested, the services covered by the card have been severely curtailed (especially dental services), the prescription charge has commenced (the greatest impact being on the sickest and the poorest), daycare services have been cut, homecare services and hours have been reduced, night-time and evening rural transport has been terminated, and the annual housing-grant funding of more than half the county councils had run out by July this year,” Timmins said.
And while the consumer price index had fallen by 2.9 per cent between January 2008 (the last time there was a pension increase) and July 2010, he said, the cost of key services for pensioners had soared, such as the cost of bottled gas (up 17.8 per cent), solid fuel (9.8 per cent), hospital services (12.1 per cent) and health insurance (32.8 per cent). The people most affected by this are probably among the 23,000 members of Active Retirement Ireland. They are the ones who join the savings clubs and scrimp and bargain relentlessly for their midweek breaks at home and abroad and dress up to go dancing in their best rig-outs – although, as the group’s chief executive, Maureen Kavanagh, says, they will rarely be seen in a pub.
As they gain in confidence and visibility, group bargaining is becoming a feature of their lives, whether with tour operators or major supermarkets. It’s hardly surprising that they now have the time and confidence to frighten the wits out of nervous politicians. But Patricia Conboy of Older Bolder insists “the over-65s are not untouchable . . . We absolutely accept that there is a percentage of older people who are well-off, and we very much believe that older people with significant resources should pay their due, but they should pay through the tax system,” she says.
“Our concern is that a majority of the current cohort are dependent on State pensions and our view is that there are certain provisions which are universal so they attract no stigma and are not administratively cumbersome. In 2007 roughly 75 per cent were reliant on State pensions for two-thirds of their income.”
It’s the contributory pension that appears to be under fire. Yet the department’s information systems seem incapable of quantifying how many pensioners are solely reliant on contributory State pensions. Thus, Conboy claims, they are creating a “false distinction” between contributory and non-contributory, based on no information, yet arguing that those on the latter can afford cuts.
“But we don’t want to see any social welfare cuts,” she says. “We would advocate reform of the tax relief on private pension provision. The Government has a policy which it hasn’t implemented. The ESRI has said that if tax relief was standardised at 33 per cent it would make a saving of €1 billion.”
But surely the State needs the money now? “And we don’t see why it shouldn’t be introduced now . . . There are subgroups that have been working on this.”
With articulate, well-briefed leaders, it’s hardly surprising the grey vote – propelled by anxiety, uncertainty and, crucially, little hope of a turnaround in their lifetime – has made its presence felt in the past year or so. What makes it more threatening and insistent is that it is organised and, thanks to the crash, now includes a thoroughly disillusioned and terrified middle class – one that goes out to vote.
All week, wherever potential pensions were discussed, there was no avoiding McDaid’s “gold-plated, guaranteed” pension, worth over twice the average industrial wage. “He was an influential TD over many years with the party that wrecked this country, yet his golden handshake alone adds up to two years worth of the State pension,” says Hannah, a 72-year-old whose frugal retirement fund went down in flames a couple of years ago with Anglo Irish Bank. She sacrificed a modest but well-located home for a characterless little apartment in south Dublin, put the surplus cash into bank shares, which vaporised, and is now solely dependant on the State pension. Although the only upside is that her reduced circumstances render her eligible for a medical card, she is somehow hanging on to her private health insurance. “It’s plan C, nothing luxurious, but as you get older things start to fall apart a bit and you just worry when you see all that’s happening to the health service.”
Few outside their four walls know it, but Peter and Maura, a couple living nearby, are in an almost identical situation. “The young people say, ‘Sure, what are you worried about: isn’t the mortgage paid and you’ve no children to look after?’ ” says Maura. “But the one thing all older people think about is where will they be in five years time? What condition will they be in? Will they be in a nursing home? You don’t want to be a burden on your family or anybody. That’s the main thing, and especially now where everybody has a problem. We thought we’d be in a position to pay for private care, but it’s completely different now.”
They watched their children emigrate one by one in the 1980s, never to return, and saved hard for retirement, putting their money into bank shares. “I didn’t take dividends for 15 years, just put it all back into shares,” says Peter. “Younger people see it as just a punt that didn’t work out. But to us the old saying ‘it’s like money in the bank’ really meant something . . . All I can say is thanks be to God there was a change in the law that forced the self-employed to contribute to a [State] pension and I had enough stamps built up by the time I retired.”
The couple have held on to a small sum that survived the share collapse. “But what do you do with it? Put it into Prize Bonds or the post office? But sure if the country goes down, that all goes down too. We’ve been over and over it in the past few weeks . . .” Finally, they admit they may funnel it into a foreign bank, which is not unusual. There are of anecdotes suggesting that this generation of older people has lost faith in all financial institutions and is reverting to putting money in the mattress or moving it out of the country, from which it may never return, according to a financial adviser quoted in a recent reports from Cardi, the Centre for Ageing Research Development in Ireland. “These people have been damaged for the rest of their lives. I would argue that a younger person will forget the pain of recession after a period of two good years; the elderly will never forget this recession.”
It’s a telling glimpse into the angry, disillusioned, fear-driven mindset of many retired people. What remains, however, is pride. People are reluctant to put their names to stories like these. While Peter and Maura were happy to have their full names used initially, Maura later rang to ask that they remain anonymous. “I know a lot of people are in the same boat, but we’ve got to this age and managed to keep our heads high. And we just feel a bit stupid losing our money like that.”
Pride is one of the reasons Irish grey power isn’t yet a fully formed force. Guilt may also be a factor, according to another financial adviser quoted by Cardi: “Don’t forget it is today’s elderly that first looked to bricks and mortar for their investment and of course passed this concept on to their children. We now know that it was this idea that has fundamentally caused the collapse in this country.”
For some, any guilt may be exacerbated by talk of the boom-time wealth transfers from young to old in the form of obscenely overpriced property. But Cardi raises another aspect of this that is less often considered: “parental gifts”, the banks’ great emotional push to get parents to remortgage their homes to get their young onto the property ladder; the bank guarantees; the considerable sums being stumped up even now to help out with mortgage repayments, first communions and confirmations. It quotes Money Advice and Budgeting Service advisers who say “lots of [older] people have been helping their families out financially and could be paying mortgages off into their 70s . . . and are now in a much worse position than they were 10 to 15 years ago”.
Meanwhile, those who had nothing but the State pension – and possibly never expected or planned for more – “have been the least affected by the recession”, according to Cardi. It quotes a woman named Kristina: “I don’t see any difference . . . I’m still getting the one pension and prices have decreased a bit in the shops. I don’t think we are hard-done-by.”
Nonetheless, Ellie Leavy, an 84-year-old Maynooth woman on a State contributory pension, who does sponsored walks to raise coal money for the less well-off, sees no reason why pensioners should concede a penny of the pension. “I worked long enough for it, and I earned every penny of what I get. My husband died at 54 and I reared six children, while working at Irish Meat Packers for three pound, seven and sixpence a week in the Seventies. You’d be counting the shillings I can tell you. That’s the beauty of the recession; we’re used to hard times.”
Leavy was conspicuous in last year’s march against means testing for medical cards. “Ah, that was a brilliant, brilliant day. And I’ll do it again in a flash.”
The over-65s at a glance
- Over-65s make up 11 per cent of the population (the lowest in the 27 EU states).
- 25 per cent live alone.
- Nearly 60 per cent have a chronic illness or disease.
- 30 per cent have a disability, rising to 58 per cent of 85-year-olds.
- 84 per cent of those aged 65 to 74 depend on social transfers to protect against the risk of poverty (Older Bolder Alliance).
- But the risk of poverty among that age group more than halved to 11 per cent between 2004 and 2008.
- State pension for a single person: €13,225 (including allowances).
- State pension for a couple: €22,703.
- State contributory pension for a couple: €23,952.
- Over half live on incomes of less than €300 a week.
- Just over 7 per cent of 65- to 74-year-olds and 4 per cent of over-75s had an income of more than €770 a week in 2008.
- Private pension plans lost 38 per cent of their value in 2008.
- Funding of State pension cost €4.3 billion in 2008.
- Tax relief on private pensions cost €3 billion.
