Joan Burton (Dublin West, Labour) | Oireachtas source

As in the case of section 3, the changes I propose in this section also follow on from the pension reform measures I announced in the budget in December 2011, which were implemented from September of this year. Two changes in the State pension contributory scheme are contained in this section, one of which aligns the contribution conditions applying to the pension across all categories of claimant. The other abolishes a provision which is no longer required.

Under legislation which was enacted in 1997, the number of PRSI contributions a claimant for the contributory State pension is required to have paid in order to be eligible for that pension increased from 156 to 260, with effect from April of 2002. This further increased to 520, with effect from April of this year. That plan was set out in 1997 and was implemented in 2002, with the final part being implemented in April 2012. The 1997 legislation provided for a number of consequential amendments and for "savers" to protect existing pensioners. However, the 1997 legislation inadvertently omitted to provide for the increase from 260 to 520 in the case of a particular category of claimant for the contributory State pension.

The 260 contribution requirement still applies in the case of claimants for contributory State pension who have a reduced yearly average of between ten and 20 contributions. This means that this particular category of claimant is treated differently from all other claimants for contributory State pension, including claimants for other reduced rate pensions who are required to have paid a minimum of 520 PRSI contributions. Section 4 aligns this requirement in the case of all claimants for contributory State pension who reach pension age from 1 January 2013 onwards. Existing recipients of the contributory State pension will not be affected by this measure.

Section 4 makes a further amendment to abolish a provision which is no longer required. Special pension arrangements were introduced in 1988 to cater for people who had been affected by the operation of the earning limit for insurability purposes that applied in the case of non-manual workers before 1974. In those days, a distinction was made between manual workers and people who worked in offices. Manual workers paid a stamp, but middle management and other office workers who had access to company pension schemes did not. Before the pre-1974 arrangement was changed, certain people who had gaps in their social insurance records relating to periods when they were not covered by social insurance found it difficult to meet the existing reduced yearly average requirements for the purposes of the contributory State pension. In those circumstances, special lower rate pensions were introduced to cater for these groups. The range of reduced rate pensions generally available to claimants of the contributory State pension has been improved since 1988. As a result, there is no longer any difference between the reduced rate payable under these special arrangements and the reduced rate of the contributory State pension generally. As a consequence, section 4 of the Bill proposes to abolish these provisions in the case of those who reach pension age on or after 1 January 2013. Existing beneficiaries of these special pension arrangements will not be affected by this measure.

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