# New Social Welfare Payment for 65 Year Olds



## LiferT (8 Feb 2021)

Hi

A new social welfare payment for 65 year olds, who are no longer employed, was announced today.

This is to rectify the situation where people who leave work at 65 will need to wait, sometimes for several years, before claiming the social welfare pension.  I understand that the proposed extension of the pension age to 68 was put on hold after the last general election.

If, at the age of 65, I decide to retire and draw an income from an ARF, will I be able to claim the new social welfare payment?

Also, is there a difference between being contractually obliged to retire at 65 and voluntarily retiring at 65?

Many thanks in advance.

LT


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## Early Riser (8 Feb 2021)

LiferT said:


> is there a difference between being contractually obliged to retire at 65 and voluntarily retiring at 65?



It appears not:
_The new "Benefit Payment for 65-year-olds" will apply to people aged between 65 and 66, "*who cease employment, whether voluntarily or otherwise"*_. https://www.rte.ie/news/ireland/2021/0208/1195676-pension-social-welfare/



LiferT said:


> I decide to retire and draw an income from an ARF, will I be able to claim the new social welfare payment?



It is based on PRSI record and not a means test, so the ARF drawdown should make no difference (except that total income will be subject to income tax).


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## Bronte (8 Feb 2021)

This is so stupid. Why don't they just put the pension age back to 65.


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## Sadim (8 Feb 2021)

Bronte said:


> This is so stupid. Why don't they just put the pension age back to 65.



Better still, if it is solvency they are concerned with why can't they break down the SCP into a basic and a top up element rather than faffing about with ages? A minimum guaranteed amount (say, 60% of the SCP.... 60% x €248.30 = €149.00) with the balance by way of a means tested top -up. That would improve solvency and introduce fairness to it. Afterall, a well pensioned employee on €200,000pa is hardly reliant on the SCP?


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## ivannomonet (8 Feb 2021)

Sadim said:


> Afterall, a well pensioned employee on €200,000pa is hardly reliant on the SCP?



Surely not required/irelavent if they've paid PRSI all their life?


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## Sadim (8 Feb 2021)

ivannomonet said:


> Surely not required/irelavent if they've paid PRSI all their life?



True but it is a social welfare benefit is it not? Like, even taking my 60% cut-off above a €148.30pw (€7,712pa) pension would require a fund of something like €220,000 at retirement to pay for it (assuming an annuity rate of 3.5%). Would the cumulative value of their employee PRSI contributions have exceeded €220,000 over a 40 year working life. 

Take an average salary of €50,000 increasing by 2%pa and a PRSI rate of 4% => €120,000 contributions in nominal terms over 40yrs. If this was in a dedicated fund earning 3%pa, those contributions should total €220,000 over 40yrs ergo, the benefit is fully funded.... purely accidental my choise of 60% universal benefit and finding it was fully funded based on a salary of initial €50,000pa and a 2% annual increase!

The point I am making though is that the current SCP rate of €248.30pw is not fully funded so, the argument you've paid PRSI all your life is only half of true. The full truth is you didn't pay enough PRSI relative to the benefits. And, its even worse when you consider that PRSI covers more benefits than just the SCP


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## Freelance (9 Feb 2021)

Sadim said:


> True but it is a social welfare benefit is it not? Like, even taking my 60% cut-off above a €148.30pw (€7,712pa) pension would require a fund of something like €220,000 at retirement to pay for it (assuming an annuity rate of 3.5%). Would the cumulative value of their employee PRSI contributions have exceeded €220,000 over a 40 year working life.
> 
> Take an average salary of €50,000 increasing by 2%pa and a PRSI rate of 4% => €120,000 contributions in nominal terms over 40yrs. If this was in a dedicated fund earning 3%pa, those contributions should total €220,000 over 40yrs ergo, the benefit is fully funded.... purely accidental my choise of 60% universal benefit and finding it was fully funded based on a salary of initial €50,000pa and a 2% annual increase!
> 
> The point I am making though is that the current SCP rate of €248.30pw is not fully funded so, the argument you've paid PRSI all your life is only half of true. The full truth is you didn't pay enough PRSI relative to the benefits. And, its even worse when you consider that PRSI covers more benefits than just the SCP



Shouldn’t your calculations include employer’s PRSI ?


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## Freelance (9 Feb 2021)

Bronte said:


> This is so stupid. Why don't they just put the pension age back to 65.



Couldn’t agree more. They never miss an opportunity to make these systems more complicated. A 64 year old unemployed client will now move through three different state supports in three years.  Jobseekers -> Benefit Payment for 65-year-olds -> State Pension (Contributory)


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## NoRegretsCoyote (9 Feb 2021)

Pension age is actually pretty simple in Ireland compared to a lot of the EU where it can depend on stuff like whether you worked down a mine.

Successive governments missed a trick by proposing these big one-year jumps that meant if you were born on 31 December 1954 you got a pension the next day but if you were born on 1 January 1955 you had to wait another 365 days. This isn't fair.

The UK approach, of six-week increases in eligibility age every year, would have been much more equitable.



Freelance said:


> Shouldn’t your calculations include employer’s PRSI ?



Correct. Everyone forgets this.

The actuarial review of the social insurance fund shows that on an average salary the state pension more or less funds itself in notional terms (nothing is invested of course). If you have a long career on low wages the state pension is really good value. If you are a doctor or something you are probably funding yourself three times over.


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## Early Riser (9 Feb 2021)

Isn't it more or less a reinstatement of the old State Pension (Transition) that we had until 2013 ?






						Operational Guidelines: State Pension (Transition)
					

Operational Guidelines: State Pension (Transition).




					www.gov.ie


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## Sadim (9 Feb 2021)

Freelance said:


> Shouldn’t your calculations include employer’s PRSI ?



In truth I do not know. I would have thought employers PRSI covers a lot more things like sick pay, statutory redundancy, disability etc, even non contributory state pensions as they are all drawn from the social insurance fund? The employer contributions are not part of any individual's PRSI record, they just go into a general fund, the only element that is personal is the employee contribution. It is all a bit opaque, who is funding what and from what I've seen there have been no actuarial calculations done on it.


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## Sadim (9 Feb 2021)

NoRegretsCoyote said:


> Pension age is actually pretty simple in Ireland compared to a lot of the EU where it can depend on stuff like whether you worked down a mine.
> 
> Successive governments missed a trick by proposing these big one-year jumps that meant if you were born on 31 December 1954 you got a pension the next day but if you were born on 1 January 1955 you had to wait another 365 days. This isn't fair.
> 
> ...



Yes, the UK state pension rose to 66 in 2020 but not in simple one year blocks, it was a more scientific way of doing it and definitely fairer than the anomaly you have highlighted


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## Sadim (9 Feb 2021)

NoRegretsCoyote said:


> Pension age is actually pretty simple in Ireland compared to a lot of the EU where it can depend on stuff like whether you worked down a mine.
> 
> Successive governments missed a trick by proposing these big one-year jumps that meant if you were born on 31 December 1954 you got a pension the next day but if you were born on 1 January 1955 you had to wait another 365 days. This isn't fair.
> 
> ...



Yes, I did some rough calculations assuming a €50,000 salary with 2% annual increases and zero notional "investment" return over a 40yr working life and the SCP in that case was largely funded. I ignored employer PRSI assuming that covered all the extra benefits coming out of the social insurance fund.


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## gipimann (9 Feb 2021)

Sadim said:


> In truth I do not know. I would have thought employers PRSI covers a lot more things like sick pay, statutory redundancy, disability etc, even non contributory state pensions as they are all drawn from the social insurance fund? The employer contributions are not part of any individual's PRSI record, they just go into a general fund, the only element that is personal is the employee contribution. It is all a bit opaque, who is funding what and from what I've seen there have been no actuarial calculations done on it.



Non-contributory pensions are not paid from the Social Insurance Fund.  They are paid from the annual budget allocation of moneys to the Department (called the Vote).  PRSI, whether paid by employee or employer, is used to pay all of the contribution-based SW payments (jobseekers, illness, invalidity, widow/er, state pension).
The Social Insurance Fund is subject to regular actuarial reviews.







						Minister Doherty Welcomes Publication of the Actuarial Review of the Social Insurance Fund 2015
					

The annual shortfalls are projected to increase into the foreseeable future as the ageing of the population starts to impact.




					www.gov.ie
				



.

Link to the last review in 2015.


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## Gervan (9 Feb 2021)

Sadim said:


> Yes, the UK state pension rose to 66 in 2020 but not in simple one year blocks, it was a more scientific way of doing it and definitely fairer than the anomaly you have highlighted



My sister in the UK, born the year before me, got her pension at age 60. I had to wait till 63 and a half for my UK pension.  It didn't feel fair.


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## Sadim (9 Feb 2021)

gipimann said:


> Non-contributory pensions are not paid from the Social Insurance Fund.  They are paid from the annual budget allocation of moneys to the Department (called the Vote).  PRSI, whether paid by employee or employer, is used to pay all of the contribution-based SW payments (jobseekers, illness, invalidity, widow/er, state pension).
> The Social Insurance Fund is subject to regular actuarial reviews.
> 
> [/URL]
> ...



Thanks for the clarification gipimann, every day is a school day! I was not aware the non-contributory came out of general govt funds as opposed to the social insurance fund. The point you were making about PRSI though is important too, it is a fund contributed by empoyers and employees PRSI and covers a lot more benefits than just the SCP. That link to the actuarial review did not work though


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## Sadim (9 Feb 2021)

Gervan said:


> My sister in the UK, born the year before me, got her pension at age 60. I had to wait till 63 and a half for my UK pension.  It didn't feel fair.



That was the way until recently in the UK, women had a retirement age of 60 and men had a retirement age of 65. The respective retirement ages have been converging progressively since 2015 or 2016 I think and now are 66 for both sexes. I am surprised nobody ever took a discrimination case against HMG but I suppose it doesn't matter now as the EU directives no longer apply!


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## NoRegretsCoyote (9 Feb 2021)

gipimann said:


> Non-contributory pensions are not paid from the Social Insurance Fund. They are paid from the annual budget allocation of moneys to the Department (called the Vote). PRSI, whether paid by employee or employer, is used to pay all of the contribution-based SW payments (jobseekers, illness, invalidity, widow/er, state pension).



This is true in pure accounting terms but not in substance.

When the Social Insurance Fund (SIF) is in deficit it is topped up from the Exchequer via taxes. And when in surplus it just pays it back to the Exchequer. The SIF doesn't have an investment strategy or any autonomy.

No one who looks at the sustainability of the public finances makes much of a distinction between the SIF and the Exchequer. People will get old, they will need pensions, and they will have to be paid for whether out of PRSI or tax receipts.


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## Derry25 (9 Feb 2021)

I have already"retired" at age 62  having worked in the PAYE sector for 42 years and am currently drawing from my ARF. When I reach the age of 65 will I be entitled to this new Social Welfare Payment? Thanks in advance.


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## Early Riser (9 Feb 2021)

Derry25 said:


> I have already"retired" at age 62  having worked in the PAYE sector for 42 years and am currently drawing from my ARF. When I reach the age of 65 will I be entitled to this new Social Welfare Payment? Thanks in advance.



Are you signing for JB and/or credits? It seems you would need at least 39 paid or credited contributions in the governing contribution year, ie, the second last complete tax year before the year of application for this pension. So if you reach 65 in 2024 the governing year would be 2022. 
Alternatively you would need 52 Class S contributions in 2022. It will depend on how much you are drawing from the ARF - it may not be sufficient for this.

That is how I read it, anyhow : https://www.gov.ie/en/service/49d25...5-year-olds/?referrer=http://www.gov.ie/bp65/


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## Derry25 (9 Feb 2021)

Thank you for your reply.
_Alternatively you would need 52 Class S contributions in 2022. It will depend on how much you are drawing from the ARF - it may not be sufficient for this._
I draw €15,000 P.A. from my ARF so I do pay class S PRSI. 
So, under the current rules I qualify?


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## Early Riser (9 Feb 2021)

Yes, that should be fine. You should be paying €600 Class S on that. I think €500 is the minimum.


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## Derry25 (9 Feb 2021)

Early Riser said:


> Yes, that should be fine. You should be paying €600 Class S on that. I think €500 is the minimum.


Thank you so much.


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## Sue Ellen (9 Feb 2021)

Derry25 said:


> Thank you for your reply.
> _Alternatively you would need 52 Class S contributions in 2022. It will depend on how much you are drawing from the ARF - it may not be sufficient for this._
> I draw €15,000 P.A. from my ARF so I do pay class S PRSI.
> So, under the current rules I qualify?



You should also confirm this with the relevant Department.  AFAIK you can request a statement possibly through your www.mygovid.ie/
account.


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## Freelance (9 Feb 2021)

Your pension "payslip" should show the PRSI class and the number of weeks accrued.

You can obtain a statement of pension contributions from h t t p s : / / s e r v i c e s . m y w e l f a r e . i e / e n / t o p I c s / s t a t e m e n t s - a n d - r e f u n d s / c o n t r i b u t I o n - s t a t e m e n t / (remove the spaces) provIded you have a MyGovID account. This is the best way to get it. The alternative, which isn't publicised very well, is to write and request your statement of pension contributions from the following address; you will need to provide them with your PPS no, your old National Insurance number (if you were working in Ireland in the 70s) and any previous names. If you are writing I'd suggest using registered mail as I've had difficulty getting a response from the PRSI Records section in the past. Note that the Department's records (including the online ones) are generally 5 or 6 months out of date, so the 2020 contributions will not appear on your record until mid 2021.

PRSI Records
Department of Social Protection
McCarter's Road
Ardaravan
Buncrana
Donegal

By the way it also makes sense to get this record and check it thoroughly to ensure that your record is correct and that all contributions for all employments throughout your working life were properly recorded. This will help ensure that you get your correct entitlement when it comes to Pension Age.

If by any chance you aren't currently paying PRSI at one of the rates which entitles you to the new "Benefit Payment for 65-year-olds" (this is unlikely based on then pension details you provided) you could look into voluntary social insurance contributions. AAM is blocking me from posting links but if you google "voluntary prsi contributions" you will find information on w w w . c i t i z e n s i n f o r m a t i o n . i e and the w e l f a r e . i e section of w w w . g o v . i e


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## Early Riser (9 Feb 2021)

Freelance said:


> If by any chance you aren't currently paying PRSI at one of the rates which entitles you to the new "Benefit Payment for 65-year-olds" *(this is unlikely based on then pension details you provided*) you could look into voluntary social insurance contributions



Why is it unlikely ? The poster has sufficient total contributions and should have sufficient Class S contributions (ie, 52) in the "governing contribution year" - based on an ARF drawdown of €15,000 p.a :

*"*_OR

have paid at least 104 PRSI insurable employment contributions at Class A or H

AND

have paid 52 PRSI self-employment contributions at Class S in the governing contribution year."_

https://www.gov.ie/en/service/49d25...r-olds/?referrer=[URL]http://www.gov.ie/bp65/[/URL]


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## Freelance (9 Feb 2021)

Early Riser said:


> Why is it unlikely ? The poster has sufficient total contributions and should have sufficient Class S contributions (ie, 52) in the "governing contribution year" - based on an ARF drawdown of €15,000 p.a :



I think you misread my post - It is unlikely that he/she isn't paying PRSI, or avoiding the double negative which is probably confusing you, it is likely that he/she is paying PRSI, however it is possible.


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## dave28 (10 Feb 2021)

Maybe someone would know if I will qualify :
I turn 65 at the end of this year so 2019 is my "Governing Contribution Year"
However, I lived and worked & contributed in U.K. for that year (self employed) - Other than that I tick all the boxes to qualify.
I know Contributions are recognised between EU member states (Article 6 EU/EEA Regulation 883/2004) for other benefits so rang Welfare today but basically they said call us back when you turn 65 !! I think they didnt want to commit to anything so early in the new systen).
Anyone have any ideas ??


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## michaelm (11 Feb 2021)

Early Riser said:


> The poster has sufficient total contributions and should have sufficient Class S contributions (ie, 52) in the "governing contribution year" - based on an ARF drawdown of €15,000 p.a


If one draws down €15,000 in one amount in a given (say governing contribution) year, paying 4%, so €600 . . by what mechanism does that translate to 52 Class S contributions in that year?  Might you have a Revenue or Citizens Information link which explains same?

Does it not fall under "unearned income" and thus be treated as Class K contribution which does not entitle the person to any social insurance benefits? https://www.citizensinformation.ie/..._prsi/social_insurance_in_ireland.html#l09b20


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## Early Riser (11 Feb 2021)

No specific link for ARFs. 

But how is it any different from self-employed people, or people with income from investments, who pay Class S? -





						Class S PRSI
					

Information on Class S PRSI contributions paid by self-employed people.




					www.citizensinformation.ie
				




Or voluntary contributions -





						Voluntary social insurance contributions
					

Voluntary social insurance contributions can help you qualify for a social insurance payment in the future. Find out more about making voluntary contributions.




					www.citizensinformation.ie


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## michaelm (11 Feb 2021)

Voluntary contributions are potentially much more costly.

On further digging this says that ARF PRSI is treated as Class S.

I'd still like to see the mechanics of how someone could draw down €12,500 from an ARF in their governing year (year they turn 63), paying the minimum €500 PRSI, and have confidence that that translates into 52 Class S contributions, therefore ticking a box re applying for the Benefit Payment for 65 Year Olds. Methinks it's too good to be true.

EDIT: this previous AAM thread has largely clarified it for me.


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## Early Riser (11 Feb 2021)

The reference to voluntary contributions relates to the "one off" payment method and the €500 minimum amount - not to cost.

So you reckon Class S PRSI won't count? Or that only Class S on on ARFs won't count? How would that be administered?


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## michaelm (11 Feb 2021)

I don't reckon anything.  I'm just failing around trying to figure out . .
1. whether ARF PRSI is Class S - and that seems to be the case given the Ministers Dáil answer in 2018
2. how you need to manage ARF drawdown if you want to to ensure your record shows 52 (or 39 depending on what you need) Class S contributions - that seems to be answered by AAM member bstop here.
3. how much you would have to draw down in a governing year to satisfy the 65's Benefit requirement of 52 (or 39) stamps - it seems that if you draw down monthly you'll get 52 stamps but if it's a one off drawdown it needs to be min. €12,500 to get 52 stamps.  I wonder how little you can draw down monthly and still get full stamps re 65's Benefit and State pension (maybe 5000/12?).


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## Early Riser (11 Feb 2021)

Sorry. I wasn't aware that you were unsure about ARF PRSI being Class S. The P60 that used to be issued by the ARF providers indicated this.

My reading of it is that you need *52 Class S contributions in the governing year*. 39 only seems to refer to A, H or P contributions (or credits) for that year. (Of course you have to meet the other minimum PRSI criteria also).

I am aware of the post you to which you linked  suggesting that you could maintain a full Class S record with a drawdown of less than €12,500 if the drawdowns are scheduled monthly. Perhaps, but I would be reluctant to rely on it without further verification.
For one reason, I noted 52 Class S on my record one year (in addition to A) even though the total drawdown was much less than €12,500. However, on a more recent update of the record there is just one Class S. I didn't check this further because it didn't impact on me, as I had the Class A anyway.
A second reason is the minimum voluntary payment of €500. I would be surprised if you could get a full record by paying less than this by way of an ARF. I recall another thread where a poster suggested than an ARF PRSI payment of less than €500 could be topped by way of voluntary contribution to the required €500 for the purpose of maintaining a full record (I haven't searched for the thread).


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## michaelm (11 Feb 2021)

Early Riser said:


> Perhaps, but I would be reluctant to rely on it without further verification.


Me neither.

If I understand it correctly now then someone retiring early, say 60, could draw down the yearly minimum (4%) from their ARF initially, then draw down €12,500 the year they turn 63 only, to ensure ticking the 52 Class S contributions in the governing year re the 65s Benefit, before reverting to 4% the following year (the year they turn 64).


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## Early Riser (11 Feb 2021)

That would seem to cover it. Of course it doesn't maintain the record for the State Pension, if short of 40 (apart from one year).


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## bstop (2 Mar 2021)

There is a report on this payment in Monday's Irish Independent.  The qualifying criteria has been changed. On the launch day it was posted on gov.ie that 39 prsi contributions were needed in the governing year and that these could be credited contributions. This has now been changed on the gov.ie site and now at least 13 of these contributions must be paid contributions. Willie O'Dea has highlighted this change and has said he has disappointed constituents contacting him who were lead to believe that they qualified but have now been told they will not get the payment. A cynical person might conclude that the press launch for this payment was a deliberate misleading of our shortly to be 65 year olds.


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## collycallac (10 Mar 2021)

bstop said:


> There is a report on this payment in Monday's Irish Independent.  The qualifying criteria has been changed. On the launch day it was posted on gov.ie that 39 prsi contributions were needed in the governing year and that these could be credited contributions. This has now been changed on the gov.ie site and now at least 13 of these contributions must be paid contributions. Willie O'Dea has highlighted this change and has said he has disappointed constituents contacting him who were lead to believe that they qualified but have now been told they will not get the payment. A cynical person might conclude that the press launch for this payment was a deliberate misleading of our shortly to be 65 year olds.


Hello all,  
 I am one of the optimistic 65 year olds who believed the statements made on the launch of this benefit for 65 year olds.
Worked most of my life and spent time caring for elderly parents.
I was delighted to see that credited contributions would be accepted.
I applied for the payment.
I was refused.
I questioned it and was told about the 13 paid contributions that were required.
I told them this was not published on gov.ie nor on the citizens advice site.
2 days afterwards the additional requirements were published.
I am more than disappointed with the way we were led to believe that all 65 year olds would get this benefit to bridge the gap to full pension.
I feel duped as well as disappointed.
Apart from The Independent on March 1st there has been very little said about this by the media.


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## bstop (12 Mar 2021)

The present government is very dishonest. The minister who announced this payment and then clandestinely changed the rules for qualification will shortly take up the justice ministry. The title "minister for injustice" would suit her better.


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