Pensions crux ‘not a reason to hike PRSI’

Ministers have been warned not to use a major projected shortfall in pension and special welfare funds as an excuse to bump up PRSI rates.

Opposition parties have expressed alarm at an explosive Government-commissioned report into the looming crisis.

Fianna Fáil social protection spokesman Willie O’Dea said a financial “timebomb” was ticking as he urged the Government not to use the issue as an excuse for personal tax hikes. He said the Social Insurance Fund report pointed to a €324bn gap in the pension and welfare bill and the funds available to pay them by 2066.

“The deficit between the amount of PRSI the Government takes in and what is given out in non-contributory social welfare and pension entitlements could be as high as €2bn this year.

“My fear, and the fear of many thousands of people across the country, is that the Government will respond to this issue by simply hiking PRSI rates.

“There is already huge concern throughout the country about changes to pension and welfare entitlements, an increase in PRSI will condemn even more people to the poverty line.

“This shortfall in future pension funding is a potential timebomb which needs full and open debate.”

A spokesperson for the minister said such reports were carried out every five years and the current one was undertaken by KPMG.

“In terms of figures provided in the report, most refer to projected annual shortfalls in SIF funding in a particular year and are expressed in current price terms. Other figures, such as the €324bn quoted, refer to the sum of all projected annual deficits up to 2066, expressed in current terms, assuming no action is taken,” he said.

The row came as Fianna Fáil TD Michael Moynihan warned that women faced “massive cuts” to their pensions due to changes that have come into effect “under the radar”.

“This is due to changes to the State contributory pension, which were announced in December’s budget but only came into effect until this month. Women in Cork and across the country who are due to retire shortly are unfairly targeted, as the new rules make no consideration of time they took out of the workplace to raise their children,” he said.

Anyone with an average of fewer than 48 PRSI contributions a year faces a cut to pension payments and those with the minimum of 10 ‘stamps’ a year on average will see their pension drop to €92 a week, down from the current minimum of €115.20 a week, Mr Moynihan said.