"Just not possible" to reimburse thousands underpaid pensions - Doherty

The Government has moved to fix the pensions anomaly from March

"Just not possible" to reimburse thousands underpaid pensions - Doherty

Minister for Social Protection Regina Doherty TD at a press briefing in Government Buildings, 10-10-2017. Image: Leah Farrell/RollingNews

The Social Protection Minister has insisted it "just isn't physically possible" to offer redress to people who have missed out on thousands of Euro as a result of the pensions anomaly.

Approximately 40,000 pensioners have been losing out on around €1,500 every year since the Fine Gael/Labour coalition brought in changes to the qualifying rates and bands for the Contributory State Pension in 2012.

The new 'yearly averaging' system saw people - mainly women who had taken time out of the workplace to raise their children - missing out on up to €35 per week in their state pension.

Yesterday, the Government announced a new Total Contributions Approach that will see those affected returned to the correct rate from March this year - however the changes will not be backdated to 2012.

Not possible

On Newstalk Breakfast this morning, Social Protection Minister Regina Doherty claimed there is "no law that can be applied retrospectively."

"That is not just true for pensions that is true for absolutely everything.

"Any law that is introduced in the Dáil, we can't suddenly say and we are backdating it for ten years - that is just not possible.

"It would be like if we introduced a new law around murder and then we said, 'we are going to backdate it so anybody that committed something like this in the last ten years, we are now going to arrest you.'

"It just physically is not possible."

Unfair

She admitted the 2012 changes were unfair, adding "that is why I have done my best over the last couple of months to get this reform introduced that we were successful with yesterday."

She went on to note that ever since she was informed of the anomaly last year, "I have never given an expectation of anything being backdated."

Delayed payment

The new system will see those affected returned to the proper rates from March - however the new payments will not be made until 2019.

Minister Doherty said she understands the frustration at the delay, but insisted she is doing her best to fix it.

She said the new payment model requires a totally new IT system which still has to be "tendered for, designed and established."

"I understand and I appreciate that there are people still disappointed but I don't have an IT system that can actually manage a total contribution model yet," she said.

"We hadn't planned on bringing it in to play until 2020 so we would be putting a tender out in the next couple of weeks."

It will cost at least €40m to fix the problem - but the minister insisted she will work to ensure it does not affect other payments from her department:   

"It will certainly test my negotiating skills next year, yes," she said.

"But it has to come out of the baseline figure and other people may be critical of that but I was very confident and adamant that this had to be fixed so it certainly will be the first item on the list when I sit down the with Department of finance this year."

Pensions anomaly

As part of the changes introduced in 2012, the Department of Social Protection began calculating pension entitlements by adding up the number of PRSI contribution made by an applicant throughout their career and dividing it by the number of years between when they started work and when they reached pensionable age.

As a result pension entitlements were calculated based on when an applicant started work, rather than on how long they were actively in the workforce.

The majority of those affected were mothers who took time out of the workplace to care for their children - many of whom were also subjected to the marriage bar which was in place until 1973.

The new homecare credit announced yesterday will allow people to get their full state pension - provided they have stayed at home for up to 20 years before returning to the workforce.

The new system will come into force on March 30th - however, any arrears will only apply from that date and not from 2012 when the anomaly began to take its toll.