Pension scheme 15 times over budget

A GOVERNMENT scheme to increase the number of people entitled to old-age pensions ended up costing 15 times more than estimated, it emerged yesterday.

Public Accounts Committee (PAC) chairman Michael Noonan said yesterday that the scheme - to make people who paid insurance ‘stamps’ before 1953 eligible for contributory pensions - will cost a total of €135 million in 2005. When introduced in 2000, the estimated annual expenditure was in the order of €8.9m.

The gross underestimation of the cost of the scheme has been examined by the PAC since first revealed in 2002 by Comptroller and Auditor General John Purcell.

Yesterday, in its fifth interim report, the PAC made a number of findings and recommendations on the vast overspend.

It found the time allowed for the Department of Social and Family Affairs to develop the estimate was too short. In addition, the number of eligible persons resident abroad, particularly in Britain, was grossly underestimated.

The PAC also implicitly criticised the Department of Finance for accepting the original estimate.

It further found the effect of the higher expenditure for the scheme was that the social insurance fund surplus was reduced.

Its main recommendation was that the departments should develop more accurate estimates to support policy decisions. The department had originally estimated there would be 3,000 claims but the actual number was 35,000.

It never foresaw the number of claims that would be made by Irish emigrants in Britain and in the US.

In another chapter, the PAC also examined the hospital waiting list initiative between 1998 and 2002 where €172m was spent but where the records were so inconsistent that it was impossible to assess if it represented good value for money for the taxpayer.

The PAC found some hospitals gave “fluctuating” performances on waiting list initiative work. It did add, however, that the introduction of the National Treatment Purchase Fund has contributed significantly to improving the situation.

The key recommendation was for proper monitoring systems to be put in place to allow evaluation of big expenditure projects. It also said that nursing homes should be used to allow patients be discharged from acute hospitals.