Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

Yes. Those recruited to the public service before 1995 pay a lower rate of PRSI and are not entitled to a State contributory pension as a result. That has nothing to do with them being men or women, married or not married. It is just that public servants recruited before 1995 pay less than one quarter of the amount of PRSI paid by anyone else. Their employer pays nothing at all for them and, therefore, they are not entitled to the State contributory pension. Their stamps do not count towards State contributory pensions because they pay at 0.9% instead of 15.1%.

On the averaging issue, Deputy Bríd Smith characterised it very clearly. She is correct, that is exactly what happens. Somebody could work for a short period of years, potentially even as a student or in part-time work, have a major gap in employment and come back to work for a long number of years and would be better off had they not done those few years of work in their late teens or early 20s. That is why we want to replace the averaging system entirely with the new system. The latter is the total contributions approach whereby what counts is the number of contributions someone made and not when he or she made them.

We are doing this work now.

We can do things that are cost neutral but I think anything we might do would be a cost to the State. I get worried when I hear people use the term, which is used a lot in Ireland, "cost to the State", as if the State were this faceless, amorphous thing that had endless money. Our actions will not be a cost to the State but to people who pay PRSI. That is how it works. I much prefer when I hear Americans talk about tax dollars and tax euros. We often talk about measures costing the Exchequer or the State, as if it were this alien thing that had a bag of money to pay for things. The social insurance system works by people paying PRSI contributions into the fund, and the fund goes to pay the State pension, the State contributory pension, maternity benefit, jobseeker's benefit and all the rest. I do not think anybody proposes to change it. The cost of any measure will be passed on to people who pay PRSI. It will be passed on to the working mothers and fathers, those who do not have children, and the employers of today. Any change we make that costs will have this impact. We should not be dishonest with ourselves, and we certainly should not be dishonest with the public about it. Any change will cost and the cost will be borne by today's workers and employers. We must be honest about it in any change we decide to make. It is not a cost to the State, but to today's workers and employers.

I welcome the interest of the Chairman of the Joint Committee on Social Protection, Deputy John Curran, in the issue and his offer to take it up as work for the committee. It would be best done by the committee, considering all the information, options, costs, number of winners and losers, and the profile of the winners and losers for any change in the rules. While I have not seen it yet, we will probably have some sort of draft of it before the end of the calendar year and would expect to be in a position to give that kind of information in the first quarter of 2017. It is a big job. It means going through PRSI records going way back. It is very far advanced.

It is not a secret that the plan we have sketched out is to move to the total contributions approach by 2020. I would like to do it sooner, if possible, given that people are retiring now and will retire in 2017, 2018 and 2019. It is envisaged that as part of the total contributions approach there would also be home maker credits. What counts will be a person's weekly PRSI contributions, but there will also be credits for home makers. It might need to be more than 20 years, given that one could potentially be looking after children under the age of 12 or caring for somebody for more than 20 years. All these measures have costs which will fall on today's workers and employers.

We have estimated, or guesstimated, what retrospectivity would cost. There is a question whether any change should apply only to those who are retiring from now on, or whether we should go back and examine all the records of people who have already retired. We have already done a guesstimate of the cost of bringing the home maker's scheme all the way through before 1994 and recalculating the pensions of those who have already retired. The cost is approximately €290 million, which would have to be borne by today's workers and employers. Again, let us be honest about it. I want to give the House the information and set out the issues, options, the number of winners and losers in each case, and the cost. This would be a very useful body of work for the committee to consider in 2017.

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