'It has made matters worse' - Government plan leaves 65-year-old retirees worse off

The new scheme will see retirees aged 65 paid €203 a week - €45 less than the rate of pay on the State Pension

Under new plans, retirees at 65 no longer have to sign on for the dole to bridge the gap until they can claim the State pension - but the scheme will leave many out of pocket by over €2,300 in a year. File Picture.

Social Protection Minister Heather Humphreys has been sharply criticised for leaving retirees €45 a week worse off in a new proposal due to be launched today.

Under the plans, retirees over the age of 65 will no longer have to sign on for the dole to bridge the gap until they can claim the State pension. Up to 2,000 existing unemployment benefit recipients will qualify for this new payment immediately.

However, in what appears to be a break in a promise made by Fine Gael during the General Election last year, the new benefit announced today is €45 a week less than the pension.

Since the gap between the retirement age and the commencement of the State pension emerged, retirees forced to leave their jobs at 65 have been forced to sign on the dole until the pension kicks in. This new payment, called the Benefit Payment for 65 Year Olds, is specifically for people aged between 65 and 66 years who cease employment, whether voluntarily or otherwise.

It is understood they will not have to “sign on” at a social welfare office to qualify for the payment, and will be free to take up an education course and still get the benefit.

According to the plan, the rate of payment is €203 a week, which is the same rate as Jobseeker’s Benefit. There will be an increase for dependants, if eligible.

This is lower than the State transition pension which was paid from the age of 65 but was abolished in 2014 when the pension age rose to 66.

However, the Government has been accused of trying to pull the “wool over the eyes” of the people while pulling the rug from under them at the same time.

Labour Social Protection spokesperson Seán Sherlock said the benefit is €45.30 less per week than the old age pension despite Coalition parties committing to the full rate during last year’s election.

He said: “The Government is clearly trying to pull the wool over people’s eyes by pulling the rug at the same time. This announcement today is a rebranding of Jobseekers payments and it is not equivalent to the previous State Pension Transition Payment. 

In effect the government has introduced a cutback and has not tackled the issue at all. It has made matters worse, in fact. People will be down €45.30 per week or over €2,000 a year.

“Fine Gael committed in the recent election to paying a transition payment at the same rate as the State Pension but the Minister has today failed to deliver. A year on to the day of the General Election they have backtracked from their commitment. 

This new payment will also only be available to those who retire at the age of 65. The Minister must clarify why the State Pension Transition payment will result in the loss of €45 because it is due to be paid at the same rate as Jobseekers Payment. This is not what they said they would do,” he added.

In response, Ms Humphreys said some people may be financially better off and some may not on this payment.

She said the new payment “it is not designed in itself to be a full state pension”.

“There's currently 2000 people on the job seekers payment at the minute so they will transfer who are age 65. But the benefits to this is that they don't have to be actively looking for another job, and that they don't have to sign on and those are the two big issues that have been raised with me on the door when this matter was raised in the election last year,” Ms Humphreys said.

In terms of auto-enrolment for private workers, Ms Humphreys said the programme for government contains a commitment to introduce a pension auto enrolment system.

“The government recognises the exceptional strain caused by the Covid-19. So we're now seeking to gradually deliver an auto enrollment system. We believe a phased introduction of the system is believed to be the appropriate in the current situation,” she told RTÉ News.

The head of social policy and employment affairs at the Irish Congress of Trade Unions, Dr Laura Bambrick, welcomed the new scheme but, speaking on RTÉ radio, questioned why the payment was being paid at the lower rate of Jobseeker’s Benefit and not the State pension. She said the difference amounts to €45 less per week, which is €2,355 for the year.

This is a departure from what Fine Gael promised at election time last year, she said.

The department said it has identified people who are currently receiving a Jobseeker’s Benefit payment who are eligible for this new payment and it is in the process of notifying them of the relaxation of the conditions to their claim.

The Programme for Government committed to come up with the new benefit. The pension age was due to rise to 67 last month, but the Government has shied away from this, pending the outcome of the deliberations of a Pensions Commission.