Thousands of pensioners receiving reduced pensions because of a change in rate bands in 2012 are set to benefit from a new system of calculating pensions announced today.

The new Total Contributions Approach will calculate pensions based on all contributions made over a working career.

There will also be provision for a new Home Caring Credit of up to 20 years to assist workers who took time out to raise families.

The new system will be implemented from 30 March, but any back money will only apply from that date, and not from 2012 when the revised rate bands took effect.

It is understood that some people may be entitled to less under the new system but in such circumstances no one will see their pensions reduced.

Minister for Employment Affairs and Social Protection Regina Doherty said the expected cost of the enhanced pensions for this year after they kick in on 30 March would be €40 million.

However, pensioners will not receive their higher payments, including monies backdated to 30 March, until the first quarter of 2019.

She said the new system would require legislation, as well as improvements in IT and other processes in the department. 

The minister said the increases would be between €20 and €40 a week, depending on the individual case. 

She said that the new system would deliver more equitable pension outcomes for tens of thousands of pensioners. 

The department also confirmed that if a pensioner dies before receiving their arrears, the money will be paid to their estate.

Active Retirement Ireland has said it is disappointed that the Government has not chosen to reverse the cuts from 2012.

"[It] would be the easiest way to address the imbalance in the system that has affected up to 40,000 pensioners to date," said ARI's Peter Kavanagh.

"We are also disappointed that the onus is on pensioners to opt-in to a scheme to rectify an error that was not of their making.

"The solution proposed by Minister Doherty falls short of this, but is a welcome step in the right direction. It is clear that the minister has been listening to us, but the solution proposed, while extending care credits, will not help those who left the workforce for reasons other than care provision."

The Head of Advocacy at Age Action has said he is disappointed that changes have not been reversed to the 2012 pension cuts.

However, speaking on RTÉ's Six One News, Justin Moran said the changes today will make a difference and that has to be acknowledged.

Mr Moran said the level of anger and frustration among some pensioners is unreal and that today needs to be the first step in eliminating anomalies, saying the decision is a move in the right direction, but Age Action would like to see more done.