Since I was appointed last year as spokesperson on social affairs on behalf of the Fine Gael Party, I have been spearheading a campaign to remedy what I consider to be a major injustice. As the motion indicates, the pension contributions for the self-employed were introduced in 1988. The first pensions became payable to those who attained the age of 66 after 5 April 1998, effectively last April.
However, there was one huge gap in the legislation in 1988. No transitional arrangements were put in place for the self-employed who were over the age of 56 in April 1988. They were forced to contribute to a fund, but under the legislation were unable to qualify for a contributory pension on reaching the age of 66. This was so because the legislation provided for a minimum contribution of ten years, which in ordinary circumstances would have been acceptable. However, it was provided in legislation for a group of people who could not meet that minimum requirement.
Pension contributions to the State operate in such a way that they are not payable after the age of 66 and could not be paid after that age, even if the applicants wanted to. Effectively, therefore, a group of people were left in limbo as a result of that legislation. Thus an enormous anomaly was created from the beginning for those who were forced to contribute to the scheme but were unable to benefit from it. Since I became spokesperson for social affairs on behalf of Fine Gael I was conscious of this injustice and anomaly and I raised the issue in the House on many occasions.
This motion was tabled last April following my dissatisfaction with the response by the Minister to a Priority Question I put down at that time. I am delighted with the success of the campaign because this major injustice will be remedied. This is clear from the Government's briefing over the weekend and from the proposed Government amendment to the motion. It seems clear that the principle of pro rata pensions has now been conceded. I welcome the decision by the Government to make this concession. I reserve my position on the issue until the details become apparent, but the principle for which all those involved in the campaign fought has been conceded by the Government and has, therefore, been established.
Many people from around the country contacted me over the past 12 months with regard to the campaign for pro rata pensions. I wish to highlight two files out of perhaps hundreds which I received. One had to be under the age of 56 on 6 April 1988 to qualify for the scheme. I received correspondence from an applicant whose 56th birthday was on 6 April 1988 and who paid all his contributions. I have on my file a copy of the formal response from the Department last May to his application refusing a pension essentially because he was 24 hours over the age at the time of the introduction of the scheme. Many others were days, weeks and months short, but that case highlighted the full impact of the anomaly created.
The other file to which I wish to refer involves an applicant in Dublin who maintained contact with me during the course of the campaign. When I wrote to him last week to advise him of my intention to move this motion on behalf of Fine Gael I received a response from his widow. He died recently and he unfortunately cannot now benefit from the scheme. The benefit to which I believe he should have been entitled from last April cannot now be paid to him.
The question of the various estimates, including the estimates of those caught in the limbo I outlined and of the cost of resolving the problem, needs to be addressed. When I pressed the issue with the Minister for Social, Community and Family Affairs in October 1997 he gave a Department estimate of 20,000 involved. He also indicated that the figure could be in excess of 20,000 because it was possible that many others who might not have indicated their interest in the type of pension involved might come forward. I have always considered that the figure would be much lower because many of those involved would have qualified in any event for a non-contributory pension and, given that the amount of pro rata pension they would get would probably be less than the non-contributory pension, they would not be interested in it. I say this from my practical knowledge and experience as I have no access to the Department's detailed estimates.
Similarly, I have always disputed past figures quoted by the Department to remedy this anomaly. Originally £756 million was mentioned as the cost over the lifetimes of the persons concerned. That figure was mentioned when I raised the issue during Question Time. I noted there was a comment from an unquoted Department spokesperson who indicated that if money of that order was available it would be more appropriately spent. With regard to figures and statistics, there are lies, damned lies and statistics. I believe the cost of remedying this injustice was not addressed at an early stage. I am glad this is happening now because the Minister would require detailed costings before he could concede on the scheme.
A review was undertaken some years after the introduction of the scheme and the original figure of £756 million was quoted as being reduced to £500 million, based on 20,000 qualifying people. I have never accepted that figure either, nor have I accepted a total overall costing of that order. I do not know the exact figure. I hope the Minister is aware of it. However, I believe a sum of £20 million per annum would be the maximum amount required to remedy this anomaly. It may be less depending on the number of people who will be entitled in any event to non-contributory pensions. I understand the Minister now accepts that the cost of removing this injustice is of manageable proportions and accordingly the principle of pro rata pensions is being conceded. I am very pleased about this.
However, while the principle may be conceded a number of issues remain to be addressed. From what date will the pension be payable? Justice would seem to indicate that for those over the age of 66 in April 1998, payment should commence from that date, as that is the commencement date for everybody else involved who qualifies under this scheme. I am talking about somebody who barely qualifies under this scheme only. If the first pension became payable last April, then anybody over the age at that time should be at least entitled to qualify from that date.
I invite the Minister to address some other issues at this stage. There is the question of the pro rata amount to be made payable to those so entitled. I always operated on the basis that if one had paid seven years contributions out of ten, and that was all one could pay, one should be entitled to a pension of seven tenths. That seems to be fair. The Minister may have other ideas and, if so, it would be appropriate for him to sketch in the detail now.
There is another important group of individuals whose concerns need to be dealt with. When the scheme was originally introduced in 1988 it was on the basis that refunds would be made for those self-employed who had to make contributions, if the applicant qualified for neither the contributory or non-contributory old age pension. The original principle was that if one did not qualify by having ten years' contributions one applied for a non-contributory old age pension and if one did not get it one was entitled to apply for a refund.
I am not sure of the exact number of applications for refund to date but, when I raised this issue in the House last April, I was told there had been a total of 3,874 applications for refunds, of which 2,868 had been paid. That amounted to £2.5 million plus interest at an average of £900 per person, according to the Minister.
A serious question now arises as to the entitlement of those who sought those refunds under the law as it then applied. Any such person should be entitled to qualify under any pro rata scheme now being introduced. They should be treated in the same way as anybody else who did not go ahead with the application for a refund. Quite a number of people did not apply for a refund in the hope and expectation that the campaign for the establishment of pro rata pensions would be successful and, clearly, they will now qualify. However, those who applied for the refunds under the law as it was at the time will also have to be considered. They should be entitled to pay back the amount of the refund so they would be put in exactly the same position as if they had neither applied for nor received refunds.
When I raised the matter of the ten year period, the Minister quoted to me in the House that the Pensions Board looked at the issue and came down in favour of having a basic ten year rule on contributions. I am not against a basic ten year rule but I have always insisted, and will continue to do so, that special provision has to be made for that tranche of people excluded by legislation at the time of the introduction of the scheme, yet who were obliged to contribute. That is a fundamental point. In the early days of this legislation, I recall raising this very issue but it was not dealt with at the time. Now is the time to deal with it since the pensions have become payable since last April.
For those who may feel I am playing free and easy with Exchequer funds from the Opposition benches, it is important to point out that is not my approach. There is a case in justice to be resolved here. We are dealing with a finite number of people. We are not making a fresh start with a scheme for the self employed. We are only dealing with those people who were caught under the terms of the scheme at the time of its introduction. The situation will not recur.