GOVERNMENT MINISTERS considered cutting the old age pension by up to €10 a week just weeks before last December’s budget, according to official documents.
While welfare rates were cut in the budget, no cuts were made to pensions. Minister for Finance Brian Lenihan said during his budget speech that pensioners were protected “in recognition of the contribution they have made to the State”.
However, briefing material prepared for the Minister for Social and Family Affairs Mary Hanafin and the Minister for Finance shows that an options paper on the scale of proposed cuts was discussed in detail.
The options considered at a meeting on November 2nd, 2009, involved cuts to the pension ranging from 4.5 per cent (or a reduction of €10.30 a week) to 1.9 per cent (or €3.90 a week).
The potential savings from cutting the pension ranged from €102 million to €253 million
The documents – released under Freedom of Information Act – are heavily redacted and do not show why the proposals were rejected.
However, cuts to the pension and other benefits to older people have proved highly damaging to governments in the past.
The current Government was forced to row back on plans to restrict eligibility to the medical card for the over-70s in 2008 following a large-scale protest by older people.
As far back as 1924, Ernest Blythe incurred the wrath of the public when he cut the old age pension by a shilling, a move that was reversed four years later.
Other cost-saving measures that were considered for the 2010 budget but not acted on included abolishing the entitlement to payment of a half-rate carer’s allowance for those in receipt of another social welfare payment.
This payment, introduced in 2007, would have saved up to €80 million, and affected about 18,000 people.
Similarly, an option to abolish the concurrent payment of half-rate illness benefit or jobseeker’s benefit to single parents or widows, saving up to €28 million, was not acted on.
Neither was a proposal to abolish the entire treatment benefit scheme – available to welfare recipients and PRSI contributors – for dental and optical benefits. This would have saved a total of just under €110 million.
More severe welfare cuts for people of working age were also considered which would have resulted in cuts of 5 per cent, reducing basic welfare payments by €10.30.
Ultimately, the Government opted to reduce basic welfare rates in the budget by between 3.5 per cent and 4.2 per cent.
Internal documents also show the Government considered introducing an “income test” for child-benefit payments ahead of last December’s budget.
The Revenue Commissioners and the Department of Social and Family Affairs indicated there were considerable practical and legal difficulties given the scale of bringing some 600,000 claimants within a new framework by January 1st, 2010.
Briefing material prepared for the Minister for Finance shows that officials felt the lack of data over the income profile of child benefit recipients was a major obstacle.
“It is difficult to estimate the impact of the income cut-off because we do not have good quality income data and, in particular, do not have data on the income profile of households receiving child benefit,” says a briefing note for Mr Lenihan.
“A number of technical issues will also have to be worked through – and potentially legislated for in the Social Welfare Bill – such as how to define income for this purpose, who is the beneficiary of the child benefit, how to treat households in shared custody arrangements etc.”
In the end, the Government introduced an across-the-board cut of €16 to child benefit.
From January 2010 the new monthly rates were €150 for the first and second child in a family, and €187 for third and subsequent children.