Seán Ó Fearghaíl (Kildare South, Fianna Fail)
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Question 428: To ask the Minister for Social Protection the steps she will take to address the concerns regarding pension entitlements in correspondence (details supplied); and if she will make a statement on the matter. [1414/12]

Joan Burton (Dublin West, Labour)
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The recently announced changes to the rates of payment for State pension are necessary if we are to ensure the sustainability of pension provision into the future. The challenges facing the Irish pension system are significant. There are currently six people of working age for every pensioner and this ratio is expected to decrease to approximately two to one by 2050. In addition, those aged over 65 will account for a greater proportion of the population while the proportion who are of working age is expected to decline. So the task of financing increasing pensions will fall to a diminishing share of the population. People are living longer and healthier lives and growing numbers of people want to work, or may need to work beyond State pension age. The period for which an average pension will be paid will be greater than the period for which a pension is paid at present. This has obvious and significant implications in relation to the future costs of State pension provision.

The principle that the amount of pension paid should reflect the PRSI contributions paid over a working life needs to be adhered to if we are to be able to fund pensions into the future. The upcoming change to the rate bands moves towards this principle.

Currently a person with an average of 20-47 PRSI contributions per year over their working life receives a weekly State pension of only €4.50 less than a person with a yearly average of 48 or more PRSI contributions. This situation is neither fair nor sustainable.

With effect from September 2012, the rate band of between 20 and 47 yearly average contributions will be replaced with new rate bands of between:-

(i) 40 and 47 yearly average contributions

(ii) 30 and 39 yearly average contribution and

(iii) 20 and 29 yearly average contributions.

The rate of State pension paid to new applicants will be proportionate to the rate band appropriate to the average number of contributions paid. Those who have fewer contributions will receive a lower rate of pension. The maximum rate is unchanged as is the rate for those with yearly average contributions between 40 and 47.

Existing pension recipients are unaffected and any changes only apply to new claimants from September 2012.

Details of the current and new rates bands for both State pension (transition) and State pension (contributory) are set out in the tables below.

In relation to the person named in this Parliamentary Question, I have asked officials in my department to correspond directly with this individual.