Joan Burton (Dublin West, Labour) | Oireachtas source

We have a smaller payment now for people with fewer than 48 PRSI contributions. The saving in 2012 would have been about €5.5 million and €8.2 million in 2013. Some of these arrangements were foreshadowed in 1997. Some of them came into force around 2002, and more came into force last year and the year before that.

While the amounts involved are small, they build up very significantly and, essentially, the principle towards which we are moving is that over time, the more contributions one makes, the higher the level of pension one will receive. In our system at present, as members who deal with cases are aware, it is extremely complicated. We allow credits for those who are unemployed or otherwise, as well as for people working at home. They are credited contributions and then there are paid contributions. The manner in which it is calculated depends on when one started work and how long one has been in insurable employment or has had contributions made for one. Incidentally, in the case of the self-employed, that would have been as little as five years, which is the reason the actuarial board would suggest that is very good value. In future, it is envisaged that people will be contributors for at least ten years over a period. This means that the more one contributes, the more one will get. The other major change in respect of contributions is that increasingly, public servants pay a full rate of PRSI. This applies in particular to all newer recruits to the public service, whereas there was a time when public servants paid contributions in respect of superannuation and a widows and orphans scheme, which I believe totalled approximately 6.5%, as well as having a modified, reduced rate of PRSI contribution. In respect of the contributory State pension, everyone is coming into a common stream of contributions and contribution levels. This increases the funding capacity of the Social Insurance Fund, which is very important. However, I repeat that the biggest tonic for the Social Insurance Fund involves getting more people back to work because as people return to work, they become contributors and stop taking from the fund in respect of jobseeker's payments.