The full cost of a pension scheme which was "completely underestimated" by Government officials is likely to be in the region of €1 billion, a Dáil committee heard yesterday. Carl O'Brien reports.
Department of Social and Family Affairs officials miscalculated the cost of a special pension scheme aimed at people employed prior to 1953 by a factor of 10 due to poor records and an unexpected take-up rate from emigrants.
While estimated to cost €8.9 million annually when launched three years ago, the scheme cost €113 million last year.
The likely cost of the scheme was drawn up at short notice, just weeks before the budget in December 1999.
The secretary general of the Department of Social and Family Affairs, Mr John Hynes, yesterday told the Public Accounts Committee that the experience had been "embarrassing" for the Department.
"In hindsight, it is clear that greater allowance should have been made for this possibility. At the time, however, this was not viewed as a factor which was likely to affect the cost to the extent that it did," he said.
Mr Hynes said he expected the total cost of the scheme "would not be a hundred miles away" from a €1 billion figure suggested by Fine Gael TD Mr Michael Noonan. The original estimates for the pension scheme were based on the number of applications for pensions which had been rejected after failing to satisfy standard contribution levels.
However, instead of the estimated 3,000 people expected to qualify for the scheme, approximately 28,000 people qualified, the majority of whom are resident in Britain.
The chairman of the Public Accounts Committee, Fine Gael TD, Mr John Perry, said the errors and circumstances surrounding the case were similar to the Government's decision to extend the medical card to the over-70s, which also had unforeseen consequences for the Exchequer.
Mr Hynes said, however, the data available from pre-1953 records was of poor quality and could not have been used in any meaningful way to estimate the cost of the pension prior to its introduction.
The Comptroller and Auditor General, Mr John Purcell, said that given the overall cost of the scheme had been "completely underestimated" by a factor of ten, he said it was an issue which merited public accountability.
It also emerged yesterday that there was little hope of recouping any money from a fraud incident where computer hackers were able to make more than €300,000 in international phone calls free of charge using the Department's phone systems.
Other companies and agencies, including the Revenue Commissioners, were also affected by the fraud which is believed to have been based in Holland, Belgium and Italy.
The Revenue lowered its liability from €75,000 to €38,000 in talks with Eircom.