Lack of retrospective change of pensions averaging is unfair – Kenny
Sinn Féin TD for Sligo, Leitrim, West Cavan and South Donegal Martin Kenny TD raised the issue of pension contributions and the unfairness of the system with An Taoiseach Leo Varadkartoday, where people’s average annual PRSI contributions had to amount to 48 weeks to get a full State pension on retirement.
Deputy Kenny said:
“This was a measure which particularly affected women who took time off to raise their families and is a very unfair measure. It meant that people with the same amount of contributions would end up with different pensions, depending on when the contributions were paid.
“Someone who began working as a teenager and ended their working life in their sixties, with a gap in between for child-rearing, due to being abroad or whatever, will get a smaller pension that someone, who for example, only began working at 55 and worked a solid 52 weeks a year until their 66th birthday.
“This arose from the contribution being worked out as the total contributions being divided by the number of years of the working life.
“There was a government commitment to change this, but today in the Dáil the Taoiseach said no change would take place until 2020 and that no retrospective arrangement would be made for those who retired from 2012 until then.
“I believe that this is very unfair and although I welcome the change, I feel something must be done for those in the relevant period who are being unfairly penalised for a bad decision by Former Tánaiste Joan Burton in the previous Government. Pensions should be based on the number of years a person has worked and paid contributions and not on the basis of when they were paid.”
Transcript of Dáil exchange with an Taoiseach
Deputy Martin Kenny: I raise an issue concerning pensions that has been brought up many times before and which the Taoiseach has given a commitment to sort out. The averaging of contributions made over a person's lifetime has left many hugely disadvantaged but particularly women who started work early in life and took a break in the middle. We know that this is a problem that needs to be dealt with and the Taoiseach made a commitment to deal with it. How does he intend to deal with it? Are we to revert back to the way it was prior to 2012 or, if not, has the Taoiseach some other scheme that he intends to put in place? When does he intend to do so? Most importantly, what is to happen for the people in the middle, those who made the same contribution as other citizens, yet who find them themselves with a lower pension? Citizens deserve to receive the same pension as others who made the same contribution.
Taoiseach Varadkar: What is proposed is a move towards a new approach called the total contributions approach. It involves taking the total number of contributions made through the course of someone's working life, whether it be 35 years, 40 years or 50 years, and the pension he or she receive will be linked with the number of contributions made, not when he or she made them. Obviously, any rule change will not be retrospective; it never is for any scheme of this nature. It is intended to have the new system in place by 2020.