Irish state pension review could lead to increases
Written by Sunniva Kolostyak
Over 70,000 pensioners in Ireland could see increases following a change to the method of calculating entitlement, according to the Irish Times.
According to the Irish paper, the minister for employment affairs and social protection, Regina Doherty, said on Thursday that she had included enabling legislation for the new total contributions approach to assessing state pension entitlement in the Social Welfare Bill.
The legislation was included in the bill, which was approved by the cabinet this week, to hasten the changes for anyone who reached pension age on or after 1 September 2012, Doherty said.
This group of pensioners were awarded less than maximum rate, on post-budget 2012 rate bands. The range of bands introduced in 2012 caused a reduction in pensions paid to people who had not paid sufficient PRSI over their working lives to qualify for a maximum pension payout.
The Irish Times said the department started sending out letters to the affected pensioners this week to explain the review process, as well as letting them know that the department will contact them directly with the outcome of their individual review.
To ensure a swift process, additional staff had been recruited to examine the PRSI records of the pensioners affected and to conduct the actual individual reviews, according to Doherty.
She said: “I am delighted to report that we are moving to make the necessary changes as fast as possible to ensure a speedy review outcome for all the pensioners involved.”
Anyone moved to a higher pension rate will have their payment backdated to March 2018. If the calculation shows a lower pension than currently being paid out, the pensioner will continue to receive payments at their current level.
“No pensioner will be worse off as a result of this review and I would expect that many will be positively impacted by the recalculation,” the minister said, according to the newspaper.
The new regime will be used to assess entitlement for everyone retiring after its introduction in 2020.
The Irish Times said the system is flawed, as the “total contributions approach” will work off the basis that 40 years of contributions will guarantee a full pension, regardless of the working life length, removing averaging. It will also allow credits for new home-caring periods to take account of time spent out of the workplace for parenting or caring duties.
This means that if someone arrived in Ireland aged 55 and worked for 10 years, they would meet the minimum criterion of 520 PRSI ‘stamps’ and qualify for the top weekly pension payment.
“However, if you started work at 17 and worked for 30 years – taking time out to rear a family or travel – your annual average, and therefore your weekly pension, would be lower even though you had contributed far more in social insurance,” the newspaper wrote.