The Labour Party is to promise substantial lump-sum payments to pensioners in the form of a backdated 25 per cent pension rise if returned to power. The party will tomorrow promise to increase all long-term pensions by 25 per cent - from the current £96 to £120 a week - if returned to government after the next election.
In a radical pitch for the votes of the State's 400,000 pensioners, it will commit itself to backdating this increase to January 1st, 2001. This could give every pensioner a lump-sum payment of £390 should an election take place in June 2001. The figure could rise to £1,170 if the Coalition continues to June 2002.
Labour's finance spokesman, Mr Derek McDowell, yesterday confirmed the move, saying it was "a means of fulfilling the party's promise to return the £150 million recovered this year in DIRT arrears to the Irish people".
It was his belief that this should be a non-negotiable part of Labour's demands in any negotiations to form a government, but it was up to his party to make that decision.
Labour's plan is to make up the shortfall between the Government's increase to be announced in next week's Budget and Labour's promised rise to £120 a week. Therefore the actual sum to be paid to each pensioner cannot be calculated until after the Budget.
Ministers have said they will increase the pension to over £100. So, if the Government increases the pension to £105 next week, for example, it will require a cheque for £390 to each pensioner to make up the difference if Labour is returned to office after an election in June 2001. This would cost £156 million.
However, if the Government, as it says it will, were to continue until June 2002, the lump sum could be £1,170 for each pensioner, or a total of £468 million.
Mr McDowell said the cost could be met this year and next out of current revenues. However, in the longer term Labour would consider allowing a quarter of the 1 per cent of GNP, currently being paid into the long-term pension reserve fund, to be put into the social insurance fund to cover the cost.
The party suggested this in a fiscal policy document several weeks ago. "We may use it to pay pensions now," Mr McDowell said. "It is absurd to insist that today's pensioners live in poverty while we make provisions for pensioners in a quarter of a century's time."