In May 2000 a special half rate old age (contributory) pension was introduced to enable those with pre-1953 insurance who could not qualify for a payment under normal qualifying conditions to receive a pension. Those already qualifying for pensions at less than half rate could also benefit from the new scheme. In order to be eligible for the payment, a person needs 260 paid contributions at the appropriate rate which can comprise a mixture of pre and post-1953 contributions.
Based on an analysis of pension claims which failed to satisfy the standard conditions and experience of take-up on previous pension measures, it was estimated that some 3,000 persons would qualify for the new pension in 2000 at a full year cost of €8.9 million. The overall claim load, ultimately, was not expected to exceed 5,000.
By the end of 2000 over 11,500 applications had been received, of which 3,545 had been awarded pensions. The Department also reviewed 13,500pro rata pension cases receiving less than half rate. Of these, 7,332 were successful in qualifying for the new pension.
Up to the end of August 2003, a total of 27,562 pre-1953 pensions were awarded. Almost 63% of these pensions are being paid to residents of the United Kingdom and other countries. The cost in 2002, which includes the budget increases, amounted to €113 million.
Prior to the introduction of this pre-1953 pension in May 2000, there was a considerable level of demand from pensioners, many quite elderly, for some recognition of their pre-1953 contributions. The pension introduced gives limited recognition to these contributions which, it has to be said, did not specifically contain a pension element and is only of benefit to persons old enough to have had contributions prior to 1953.
One of the difficulties in estimating costs was that the records available to the Department in relation to pre-1953 contributions were not in such a form as to allow for ready estimation of the numbers of contributions. Many of the records in question were incomplete and had to be supplemented by separate information obtained when claims were made. Furthermore, the Department, based on its current databases, did not anticipate the large influx of claims from persons resident abroad. This was greatly influenced by a major campaign by groups working in Irish centres of population in the United Kingdom and the Department's own publicity.
It must be acknowledged that the numbers qualifying and the overall cost of this measure have been seriously underestimated. That said, my Department is frequently required to estimate the costs of policy measures and its record in this regard is good, as has been recognised by the Department of Finance. There were particular circumstances in this case which made it highly unusual. As I explained, it related essentially to the lack of adequate data. However, the Department will take on board the specific lessons of this project in estimating the costs of similar proposals in the future.