Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Question 72: To ask the Minister for Social and Family Affairs the basis for his Department's original estimate that the granting of pensions to persons who paid social welfare contributions prior to 1953 would cost €9 million per year, when the actual cost has turned out to be €153 million per year; and if he will make a statement on the matter. [37204/05]

Séamus Brennan (Dublin South, Fianna Fail)
Link to this: Individually | In context

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 scheme. In order to be eligible for the payment, a person requires 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 did not satisfy the standard conditions and on 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 claimload ultimately was not expected to exceed 5,000 people.

To date a total of 34,538 pre-1953 pensions have been awarded and 28,700 of these remain in payment. Just over 67% of these pensions are being paid to residents of the UK and other countries. The cost in 2004, which includes the budget increases in those payments and arrears, amounted to €132.5 million. The estimated cost for 2005 is €135 million.

One of the difficulties in estimating costs in this case was that the form in which records relating to pre-1953 contributions were available in my Department did not 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 actually made. Furthermore, my Department, in basing the estimate on its databases, did not anticipate the number of successful claims which would be made by people resident abroad.

My Department is frequently required to estimate the costs of policy measures and its record in this regard is a good one as 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, my Department will take on board the specific lessons of this project in estimating the costs of similar proposals in the future.