Pension scheme ‘mistake’ costs E210m

THE cost of a pension scheme has risen to almost E210m - 13 times the original estimate - because the State did not take into account the large number of eligible Irish people living abroad.

Social Affairs Minister Mary Coughlan has admitted that her Department “seriously underestimated” the overall cost of the scheme, because many records were incomplete.

Fine Gael yesterday accused the Department of Social and Family Affairs of making a serious mistake, and said they were amazed it could make such an oversight.

“How could a Minister get it so wrong - if the head of a private company made a similar mistake they would be out the door,” Fine Gael's Social and Family Affairs spokesman Michael Ring said.

The new 67 weekly pension, for anyone who made contributions before 1953, was launched three years ago.

“But there was no expectation that the networking among Irish people living abroad was so good and there would be such a huge uptake,” Deputy Ring said.

The department originally estimated it would cost E8.9 million when it was launched three years ago. But in 2000 the new pension cost over three times that amount - E26.1 million, and the following year the bill was E70.7 million.

The new contributory pension cost the State E113.1 million last year - bringing the overall cost to E209.9 million.

The department should have had the sense to get its sums in order and the Comptroller, and Auditor General is also concerned about their calculations, Deputy Ring said.

“When the Minister got extra funding in the Budget she did not tell us that over 60% of the cost of this new pension would be going out of the country,” he Deputy Ring said.

Minister Coughlan has admitted that her Department did not anticipate the large influx of claims from people living abroad. And the main difficulty in estimating the cost of the pre-1953 scheme was incomplete records.

The original estimate was that 5,000 people would be eligible, but by last August 27,562 people had applied for the new pension.

This was greatly influenced by the department's own publicity campaign, and that of groups working in Irish population centres in Britain, the Minister said.

The Minister insisted her department's good record in estimating the cost of policy measures in the past had been recognised by the Department of Finance.

“There were particular circumstances in this case that made it highly unusual - the lack of adequate data - and it will take on board the specific lessons when estimating future costs,” Coughlan said.

Former Social Affairs Minister Dermot Ahern was Minister when this scheme was first introduced in 2000.