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A NEW REPORT from Age Action has claimed that 35,000 people have had their pensions cut because of government changes to the State Pension introduced in 2012, with many losing more than €1,500 a year.
The group says that the overwhelming majority of those affected were women, which they say “aggregated an already serious inequality between the retirement incomes of men and women”.
The report says that the method used by the Department of Social Protection to calculate the number of PRSI contributions made by workers meant that pensioners were losing out.
The State Pension is calculated by adding up the total number of PRSI contributions you make and then dividing it by the number of years between when you started work and when you are entitled to your pension.
In Budget 2011, changes were made to the proportion of state pension you got based yearly averaged contributions you were made.
For example, before 2012, if you had contributed to the system for 25 years, you would get 98% of the maximum State Pension payment. However, after this time, that same person would only receive 85% of that full amount.
In effect, this would mean a loss of €30.10 per week.
Justin Moran, head of advocacy at Age Action, said: “We need to put to bed the myth that the State Pension was protected by the last government.
While those entitled to a full pension were unaffected, many of those who would have been in line for smaller pensions lost out.
Age Action says that women would be disproportionately penalised by this.
They point out that if a woman had started work early in life and then stopped working to raise a family before getting a job again in later life, their average contributions would go way down because the pension is measured from when you first started working.
Moran adds: “This means that someone who worked for a few months in the sixties and then went back to work in 2000 gets a far smaller pension than someone of the same age who just started work in 2000.”
It’s an incredibly unfair system. People are getting very small pensions because of a decision they made to go to work in the 60s and 70s. They’re being punished for working.
Liz – not her real name – was affected by the band changes and is quoted in the Age Action report. She says: “I was so shocked, angry and annoyed when I first heard the amount I was to be awarded.
It brought back the anger I felt in 1972 when I had to leave my job. I believe I am being penalised for caring for my children.
They call on the Department of Social Protection to remove these changes and backdate payments to pensioners who’ve lost out since 2012.
Moran told TheJournal.ie that recent changes made to the PRSI system by Minister Leo Varadkar are “positive” but that they wouldn’t address this specific issue as it is designed to help people who haven’t retired yet to meet their contribution requirements.
Savings required
In response, the Department of Social Protection said that during the financial downturn, savings were required across Government departments.
“Instead of reducing the core weekly rates of State pensions for all pensioners, which would have included those pensioners who were solely dependent on that income (about 50% of such pensioners), it was decided to adjust the rate-bands on which contributory pensions are based. This took effect for people who reached pension age from September 2012.”
It said that the rate-bands are “still highly re-distributive, and someone with a 40% social insurance record will have an entitlement to 85% of the maximum rate”.
In practice, where a person has an entitlement to such a contributory pension, they will generally qualify for a higher rate of payment under another scheme, unless they have significant personal means.
The department said that it is estimated that reversing the rates of these bands to the same percentages as were in place prior to 2012 in the next Budget would carry a cost of at least €60 million in 2018, “and this annual cost would rise at a rate of €10 million per annum”.
Rather than use those funds in this manner, which would only benefit pensioners with other means above the pension itself, and who contributed less into the Social Insurance Fund, the increases in pension rates in 2016 and 2017 have been increased across the board, pro-rata where relevant, to the benefit of every pensioner.
The department said it is also expected that this will be the main focus of pension rate changes in Budget 2018.
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That’s an anomaly that needs to be rectified. It should be about the total amount of contributions. Not the average amount of contribution over time.
Absolutely, the system is not fit for purpose. If you make the minimum number of contributions, say 25 or 30 years then you should be entitled to the full contributory pension regardless of whether you take a few years off during your career or not.
Where women were forced by government regulation to leave employment then they should be credited with the PRSI contributions that could not pay through no fault of their own. For example those who lost out through having to leave as a result of marriage. This was a clear discrimination on women perpetrated by a male dominated society.
I think in uk….women who drew child allowance when not working to raise a family were credited with those years. It may be worth looking at how that system works. I thought that the basis of life in the Republic was about equality and no women should suffer financially simply due to gender. We have known fir many years that we are all Heather and living longer and the goer bent should have been more forward thinking to cover thise now reaching pension age. UK call them the war babies….that age group worked to put uk together after WW2 and should not be penalised.
So you work all your life and get 233 euro,But if you come to Ireland NEVER work you get
State Pension (Non-Contributory) Rate per week
Personal rate, aged 66 and under 80 €222.00
Personal rate, aged 80+ €232.00
Increase for a qualified adult aged under 66 €146.70
Increase for a qualified child €29.80
So you work all your life for 11 euro pension.
@Bernard Lebanidze: The non-contributory pension is strictly means tested though. It’s not automatic.
If they’ve never worked they’ll clearly qualify.
Benefits cradle to grave
So spend, spend , spend unlike those who save responsibly for their old age and get means tested?
Whist you have to sympathise we’re about to run into a major problem. The proportion of people >65 is owing to double over the next 30 years and the number of people to support their pensions will decline significantly. At the moment there are 5 people of working age for each retiree. In 2050 there will be 2 or 3. In some parts of Europe there will be 1 or 2. Making contributions for 20-25 years and expecting to receive a full pension to support you for the next 20-25 years is going to be unaffordable to the state because there are going to be far more people looking for the pension and far less people around to support them. Retirement age is going to need to be put back simply to make the system affordable and other forms of welfare will also start feeling the pressure.
Things have changed significantly in the last 30 years. Women are more likely to work outside the home. This is great from the gender equality standpoint but in most cases families now need both partners to work. There are very few jobs now that pay enough to support two adults and a couple of kids. It also means people can’t afford to have large families, even if they wanted them, because mum and dad both need to work and afford childcare. We’re facing a huge, huge issue and it appears we’re in full Bertie self-delusional ‘don’t talk down the economy’ mode. Europe is in full anti migrant mode but there’s a probability we’re going to need them simply to care and pay for us when we get old because there simply aren’t enough kids and we’re not paying enough into the pension pot for the future (often because we can’t afford to).
This change came in 2012 with very little mention in the media…….Yet any change to public service pay and pension is discussed endlessly on RTE and newspapers….Public service on way to full pay restoration and reducing pension levy….Would only be fair if this pension levy on the private sector getting a very modest pension is also removed…
You’re right. The numbers don’t add up. Anyone in their 30′s or early 40′s is deluding themself if they think they’ll be getting the state pension. The government have a duty to let people know now, however they know that will damage their ratings so are happy to see out their term, protect their own gold plated, ring-fenced pension and let their successors look after the mess.
This discussion is not about what’s going to happen it’s about Women who have been penalised wrongly through no fault of their own and have paid into the social insurance and Income taxes when they were working and thus have a right to their correct pensions.
This also seems to penalise young people who work their way through college and then choose to emigrate rather than draw the dole here. The years abroad are factored into the averaging but it’s not possible to make contributions while away unless a total of 520 were paid before departure which would require 10 years full time work.
After working all my life. Started at the age of 17 worked for less than a year broke my service for 12 years. In that time I had 6 children. Both my parents got cancer and died at home I looked after them both until their death. After that I returned to work and have now worked for 32 years and have for the past few years been looking forward to my retirement. I was amazed to find that I was cut over 25 Euro in my pension. I never had a medical card, never on the dole I paid my way all through my life which was very hard at times and then found out that I was not entitled to my full pension. I am absolutely disgusted with this and feel very strongly about it. I would love if people like me would get together and lobby for our rights. I am Irish born and bred but if I wasn’t I would be a lot better off.
So maths can be sexist?
have your say