Farmers' wives are chased for money already paid while a forgetful TD has special legislation passed to ensure he doesn't lose out, writes SARAH CAREY
THERE WAS talk last week of insiders and outsiders. Here’s a little comparison of how the system treats insiders and outsiders. Michael Woods is currently a lowly Fianna Fáil TD, but for most of his career he served in high-profile ministries. As an insider, you’d think he’d know his way around the system. Unfortunately, he didn’t know it well enough. When he left cabinet, he forgot to apply for his ministerial pension. By the time he discovered the error he’d missed out on €75,000. Ouch. Not to worry.
In October 2007, then minister for finance Brian Cowen inserted a clause into a Bill that allowed ministerial pensions to be backdated. The affable Woods was the only beneficiary of the legislative change. Fair enough. He was entitled to the €75,000; he’d just made an administrative mistake from which the system rescued him. No harm done.
In 2008, after years of lobbying by the Irish Farmers’ Association, the Department of Social Welfare agreed that something had to be done about pensions for farmers’ wives. Farmers’ wives are so outside the system they didn’t even exist until quite recently. Despite a lifetime of contributing to the family farm through their physical labour, book-keeping and increasingly complex form-filling, these women were systemic nonentities.
Like the wives of all self-employed people, they were unpaid labourers whose productivity was unaccounted for in any formal way. They appeared neither as taxpayers nor social welfare recipients. In any measure of the nation’s productivity, their contribution was unrecognised even though few would deny they were probably among the most productive workers in society.
One of the consequences is that their pension entitlements are a mess. They’re not entitled to the Holy Grail of the contributory State pension which is paid to anyone over 66 who has paid sufficient “stamps”. The contributory pension also guarantees receipt of other payments such as a fuel allowance and discounts from phone and electricity bills.
Crucially it’s not means-tested. Instead, the wives were granted either the smaller non-contributory pension or more often an allowance as her husband’s “adult dependant”. Both are subject to means tests and while that doesn’t matter so much when he’s still alive, it has significant consequences when he dies and the automatic entitlements disappear. The system recognised this wasn’t fair. So in June 2008, Minister Mary Hanafin announced that if a farmer’s wife could prove she was a true partner in the business, she could make backdated PRSI payments and once she was under 66 would be entitled to the contributory State pension.
The burden of proof in establishing a true working partnership was on the wife, but it could be done by providing documentary evidence such as her signature on cheques to suppliers or application forms for grants. In response, about 260 contributory pensions were granted to these women who truly had contributed. However, there were some hardship cases where a wife was over 66 by the time she realised she was entitled to apply. Fortunately, Section 110 Part 2 of the 2005 Social Welfare Consolidation Act said that if a person did not meet all the specific requirements, such as the age qualification, the Minister had discretion to award the pension anyway.
About 180 women who met the other conditions but had already turned 66 applied for and were granted the pension. That was fine, since the law clearly allowed for discretion to be applied.
Then last year, the law changed. The all-important “Part 2” was deleted. Fair enough, no more over-66s need apply. But then the change was applied retrospectively. About half of the women who’d already been granted the pension had their payments stopped. Worse, the department is demanding that 85 women pay back what they’d already been paid. Worse again, the department is keeping the PRSI money the women paid so they could qualify. So now lump sums have to be found to pay back a long spent pension while the State keeps the PRSI.
How on earth can they do this? Fine Gael TD Michael Creed tackled the Minister at a recent meeting of the Joint Committee on Social and Family Affairs.
Incredibly, Hanafin denied that the women were granted the pension under the discretionary clause at all. She also said that a Minister shouldn’t have discretion regarding who receives a pension. Maybe she’s right but the 2005 Act said otherwise.
To Creed’s incredulity, she maintained the women were granted the pension by mistake. Claiming that the original decision to grant the pensions was based on a mistake rather than on discretion enables the department to demand the refund.
When Michael Woods made a mistake, the system created legislation to help him get his money even though he’s well off and still earning a salary as a sitting TD.
If the social welfare system, not the applicant, makes a mistake, it demands the money back. In this case, the women made no mistake. They applied for and were granted payments under legislation applicable at the time, yet the system has gone to the trouble of deleting that legislation to facilitate a demand for a refund.
Apart from the shock of finding lump sums to pay back the money, the women have to watch the system look after the Michael Woodses not to mention the Máire Geoghegan-Quinns and Eoin Ryans who are fixed up with big jobs while holding on to their big pensions.
But they are insiders, and the farmers’ wives are outsiders. That’s the system.