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

Entitlement levels to the contributory State pension are calculated by means of a yearly average calculation, where the total contributions paid or credited are divided by the number of years of the working life. Payment rates are banded to reflect a person’s contribution history. Volunteer development workers who work abroad in developing countries are exempt from paying social insurance contributions while abroad. They may, however, be awarded credited contributions - or credits - for the duration of their absence, up to an aggregate of 5 years.

The homemaker’s scheme makes qualification for the contributory State pension easier for those who take time out of the workforce for caring duties. The scheme, which was introduced in 1994, allows gaps of up to 20 years spent caring for children under 12 years of age or incapacitated people to be disregarded when a person’s social insurance record is being averaged for pension purposes. The scheme does not involve the award of credits. Pensioners who qualify for one of these schemes still need to fulfil the eligibility requirements of the contributory State pension, notably they must have paid at least 520 weekly contributions. That is roughly ten years working out of a potential 50.

Any proposals to extend the scope of the homemaker's scheme or the volunteer development worker scheme would have very significant cost implications, and would have to be considered in the context of future budgets. When someone does not qualify for a full-rate contributory pension, that person may qualify for an alternative payment, such as an increase for a qualified adult, where his or her spouse has a contributory pension or a means-tested non-contributory State pension. My Department is currently working on the development of a total contributions approach to replace the current yearly averaging system for the calculation of the contributory State pension. An important element in the final design of the scheme will be the position of people who have gaps in their contribution records for various reasons, and this is being considered very carefully in developing this reform. To answer the Deputy's question, the estimate that we have if we were to leave the scheme as it is and backdate or allow time before 1994 to be reckoned is that the cost would be €290 million every year.

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