Written Answers. - Pension Provisions.
John Gormley
Question:
124
Mr. Gormley
asked the
Minister for Social and Family Affairs
her views on the findings of the Comptroller and Auditor General on the under-estimation to the degree of ?210 million of the cost of a recently introduced pension scheme.
[24298/03]
In May 2000, a special half rate old age contributory pension was introduced to enable people with pre-1953 insurance, who could not qualify for a payment under normal qualifying conditions, to receive a pension. People 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 analysis and previous experience, it was estimated that some 3,000 persons would qualify for this new pension in 2000 at a full year cost of €8.9 million. The overall claim load was not expected to exceed 5,000 people. By the end of 2000, however, 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 and 7,332 of these were successful in qualifying for the new pension. This high level of interest has continued with claims still being received at the rate of 60 per week. 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 UK and other coun tries. The cost in 2002, which includes the budget increases in those payments, amounted to €113 million.
Prior to the introduction of this pre-1953 pension in May 2000, there was considerable debate about this and significant claims from pensioners, many quite elderly, for some recognition of their pre-1953 contributions. I understand there were representations from all sides of the House on this issue. The pension introduced gives limited recognition to these contributions, which did not specifically contain a pension element, and is only of benefit to current pensioners.
The reason for the underestimate was, essentially, that 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 UK and by the Department's own publicity.
The numbers qualifying and the overall cost of this measure have been very seriously underestimated. That said, my Department is frequently required to estimate the costs of policy measures and its record in this regard is a good one. This has been recognised by the Department of Finance. The experience in this case was highly unusual and, as I have explained, related to lack of data. However, the Department will take on board the specific lessons of this project in estimating the costs of similar proposals in the future.
Question No. 125 answered with Question No. 76.
Question No. 126 answered with Question No. 114.
Question No. 127 answered with Question No. 88.
