Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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7. To ask the Minister for Social Protection her views on the consequences for women of changes to the State pension introduced by her; if she will introduce a new homemaker's credit; if so, the date of same; and if she will gender-proof her future proposals, including her plans to move to a total contributions approach. [17651/14]

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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My question asks whether the Minister will introduce a homemaker's credit scheme to ameliorate the gender discrimination that has resulted as a consequence of changes to the State pension scheme.

Joan Burton (Dublin West, Labour)
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As provided for in budget 2012, from September 2012, new rate bands for State pensions were introduced. These additional payment rate bands more accurately reflect the social insurance history of a person and ensure those who contribute more during a working life benefit more in retirement than those with fewer contributions. People who have insufficient contributions to qualify for a full contributory State pension may qualify for a means-tested non-contributory State pension. In addition, some affected persons may be entitled to a qualified adult increase on their spouse’s or partner’s pension payment. The increase is paid directly to the qualified adult.

The homemaker’s scheme was introduced in 1994 to make qualification for contributory State pension easier for those who take time out of the workforce for caring duties. The scheme allows 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 success of all these measures in ensuring equality of outcomes for men and women is evidenced by the poverty statistics, which show that women over the age of 65 are less likely to be in poverty than men of the same age. The most recently published actuarial review of the Social Insurance Fund confirms that the fund provides better value to female contributors than to male contributors. It also examined the changes in the contribution rules and the associated rates of payment to be introduced in September 2012. It found that those with lower earnings and those with shorter contribution histories will continue to obtain the best value from their contributions.

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The introduction of homemaker credits would give increased recognition to women carers’ work to ensure child rearing and caring duties are rewarded. However, their introduction would raise a number of issues, most notably cost. Such costs would be expected to increase very significantly over time. I will keep this under continual review as the economy recovers. A total contributions approach to pension qualification will replace the current average contributions test for the contributory State pension in 2020, although that date is subject to change. Issues such as equality of outcomes for women and men, and homemaker's credits, will be considered carefully in the context of that reform.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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The change the Minister introduced has led to a situation, since 2012, where people with an average of fewer than 40 weekly contributions per year over their working life are seeing their pension entitlement reduced by €1,500 per year. That is a substantial reduction and more significant than the reductions affecting other categories of workers. I highlighted this issue at the time the change was introduced, pointing to the substantial impact on women in particular. A recent report in the Irish Examinerindicated that the Minister's Department made her aware of the negative consequences of this change.

This is an issue that has a particular impact on women who were excluded from work by the marriage bar. What does the change the Minister introduced say to women who gave up work to care for children and elderly relatives? The care they provided subsidised the State by enabling its lack of investment in services and supports. Are we saying to these women who sacrificed their careers that we do not value their contribution? Will the Minister introduce a homemaker's credit scheme to bring up these women's credits and ensure their entitlement to a full State pension rather than the current situation where they lose out because of their contribution to society?

Joan Burton (Dublin West, Labour)
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In 1994, as Minister of State in the then Department of Social Welfare, I was involved, together with the Minister at that time, Michael Woods, in introducing the credits scheme. I recognised that access to State pension and retirement entitlements is very important for both men and women. It was a landmark scheme introduced by the Labour Party and Fianna Fáil in government.

The Deputy is suggesting that we make significant enhancements to that scheme. It certainly is an issue I keep under constant review. Many people, including many women and particularly those of limited means, have an entitlement to a non-contributory retirement pension and may also qualify for a qualified adult payment in respect of their spouse. To change the scheme would probably involve a very significant cost. In each social welfare budget for the past three years, I have provided in the Estimates of the Department an extra €200 million or thereabouts for additional pension and retirement benefits in a context where we have far more people reaching pensionable age and living for much longer. The improvements in the economy will dictate whether I am able to increase the budget more significantly than that.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I thank the Minister for her reply. I hope she will consider enhancing the scheme by introducing a homemaker's credit.

The Minister referred in her reply to the actuarial review of the Social Insurance Fund. Does she accept that an actuarial review is only that, and that it does not deal with issues such as unpaid caring work? Indeed, it deals only with payments in and out, taking no account of the caring work to which I referred.

Joan Burton (Dublin West, Labour)
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As I said, I was involved in the introduction of the credits scheme in 1994, in conjunction with the former Minister for Social Welfare, Michael Woods. That scheme represented a landmark breakthrough in retirement provision. It is an issue we need to keep under review and monitor closely. Any change, however, is dependent on resources. In each of the past three budgets, in difficult economic circumstances, I provided an extra €200 million or so of additional funding for pensions against the background of the large and welcome increase in the number of people reaching pension age and the fact they are living much longer. It would require substantial additional resources to enhance the scheme further.