State restores pension levels… but not for everyone

The government has announced plans to restore payments to some of the 40,000 people who lost up to €1,500 a year under a controversial 2012 rule which changed the way pensions were calculated.

The Minister for Social Protection, Regina Doherty, revealed that many of the people who were affected by the old rule will be entitled to a new credit that will restore their pensions to pre-2012 levels.

Although it has not been officially been announced, it is believed that of the 40,000 who lost out, only around 27,000 will benefit.

The Minister’s proposal was met by criticism as the new payment system will not operate retrospectively so those involved will receive no back payments for the losses they may have incurred.

The original problematic anomaly had seen people who took time out of work hit with reduced State contributory pensions following changes introduced by the Fine Gael-Labour coalition.

Tens of thousands of people, many of them women who left the workforce many years ago to raise families, were left disadvantaged by the manner in which their career contributions were calculated. Many of those left the workforce before 1994.

The fact that more women than men have been impacted by this issue is a worry as there is already a distinct pension’s gap in Ireland. Research released late last year revealed that Irish women are less likely to be financially prepared for retirement than their male counterparts. It also found that more women are worried about their pensions than men but fewer are taking the necessary steps to ensure they have a sufficient level of income when they stop working.

The fact that women live longer and earn lower salaries is certainly a major part of the problem but the research also suggests that many Irish women could be doing more to plan ahead for their retirement.

If you would like to find out more about setting up a pension, get in touch today. Our dedicated team will be delighted to hear from you. Your retirement might seem like a long way away but, financially speaking, the younger you are when you start, the better.

Visit today to find out more.

All the best,

The Team at Gallivan Financial

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