Martin Cullen (Waterford, Fianna Fail)

The final report of the National Pensions Board, published in 1993, recommended that the number of paid contributions required to qualify for a contributory pension should be increased to 520 contributions. At the time, the paid requirement was as low as 156 contributions. The new requirement represents 20% of the potential maximum number of contributions that a person can register over his or her working life.

The necessary legislation to effect the recommendations of the National Pensions Board was contained in section 12 of the Social Welfare Act 1997, which from that date to 2012 allowed 15 years for people to get the required number. This would have required them to have approximately five years within that 15 years which was reasonably generous. That section is now incorporated in the Social Welfare Consolidation Act 2005, which provided for the implementation of the change in two stages, with the paid contribution requirement being standardised at 260 from 2002, rising to 520 from 2012. Details of the proposed increase in the paid contributions required have been included in the Department's standard information material on pensions for some years.

In assessing the contribution records of those claiming pension for the first time in the context of work on the pensions Green Paper, the Department found that currently about 13% would fail the new conditions if they were applied at the moment. However, with improved social insurance coverage introduced in the 1980s and 1990s, and increased workforce participation across all sectors of society, this position can be expected to improve substantially in the years running up to 2012.

It is estimated that there are about 40,000 people with active social insurance records who will reach 66 in 2012. The Department is working to establish the impact of the planned change on these people. However, there are difficulties in establishing the contribution histories of those involved because of the many and varied ways in which records are held. The extent to which the increased contribution requirement should be promoted will be reviewed when the situation is clearer. Decisions will also be taken at that time on how and when individuals should be notified of their position.

The contributory pension is a very valuable benefit and I consider that it is reasonable to expect that people should contribute towards it to the fullest extent possible. Increasing contribution requirements is also consistent with trends across the EU as countries reform pensions systems to make them more sustainable in the future and to discourage early retirement among older workers.

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