Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

The State pension is the bedrock of the pension system in Ireland. It is extremely effective at ensuring that our pensioners do not experience poverty. This Government is committed to ensuring that this remains the case for current pensioners, those nearing State pension age and today’s young workers, including those who are only starting their careers. One of the landmark reforms to the State pension system I announced last September is a ten-year phased transition to the total contributions approach and the abolition of the yearly average method. This fairer system, which removes existing anomalies with the yearly averaging system, will calculate the pension payments based on the number of social insurance contributions made by a person over his or her working life, with significant pension credits granted to people who have taken time out of the workplace for caring responsibilities. During a transition period, individual pension rates will be based on the best of the total contributions approach, or a rate based on a mix of the yearly average and total contributions approaches, with the proportion accounted for by yearly average reducing from 90% to zero over ten years and the proportion accounted for by the total contributions approach increasing commensurately. We are phasing it in over ten years. Officials in my Department are currently working on the legislation and the systems to support the introduction of this change, which will be effective from 2024. For those who will not receive the maximum rate of payment, the non-contributory State pension will remain available. The means-tested payment can be paid at up to 95% of the contributory pension. Alternatively, they may qualify for an increase for a qualified adult based on their own means, amounting up to 90% of the contributory pension where their spouse has a contributory pension. I hope this clarifies the matter for the Deputy.

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