Bernard Durkan (Kildare North, Fine Gael)
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I thank the Ceann Comhairle's office for allowing me to raise this important issue. I wish to highlight the injustice done to a cohort of women, whose numbers are as yet undefined. They started their early years in the workforce in insurable employment and, after a number of years, in some cases due to the public sector bar, in other cases due to the fact they wished to rear their families, and in some cases to both, they retired from the workforce. In later years, they then found themselves in a position where they could go back to the workforce, having reared their families but, later again, on applying for the contributory old age pension, they found they did not qualify on the basis they had an insufficient average of contributions over the total period of their working lives.

A working life is determined on the basis of the period from the first year in which a person went into insurable employment to the last year in insurable employment, which could be up to 45 years in some cases. The sad part about all of this is that, in many of these cases, the same women could have qualified for a limited amount of contributory old age pension had they not gone back into the workforce at a later stage.

Essentially, I am trying to highlight the need for the Minister for Social Protection to address the issue, if at all possible, in the context of the Social Welfare Bill. While that may not be possible, it the cost aspect may not be so great that it cannot be incorporated into the Bill. One thing is certain, namely, at some stage in the future, this issue has to be addressed. It is grossly unfair that women who went into the workforce and were then forced, for one reason or another, to retire, having diligently given of their services and made their contribution, find themselves at a later stage to be outside the qualification limits. In some cases, they qualify for a means-tested old age pension, which is fine. However, if they have property or if a spouse or partner has a pension, they will not get a pension in their own right, and if their spouse or partner gets an adult dependent allowance, that will be means-tested.

This is an issue that affects quite a number of women, although the exact number cannot be determined at this stage. There is a need to address this. I would ask the Minister who is present in the House, Deputy Varadkar, to discuss this with his colleague in government with a view to identifying the precise nature and extent of the problem, and rectifying it.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Deputy for raising the issue. I am taking the debate on behalf of the Tánaiste and Minister for Social Protection, Deputy Joan Burton, who is elsewhere on Government business.

The Irish pensions system is made up of a number of schemes based on criteria such as contributions paid, income need and other factors.

These ensure that people have an adequate income when they retire. This range of supports has resulted in very similar outcomes for male and female pensioners in Ireland. Poverty rates for women and men over 65 have effectively been at parity over a number of years, despite many women having lifetime lower earnings than men. It should also be noted that, according to the most recent figures, the consistent poverty rate for those over 65 is a quarter of that for working age adults and a sixth of that for children.

The State pension contributory is one of a number of schemes and the rate of payment is related to contributions made over the years into the Social Insurance Fund by the person concerned. As such, those with a stronger attachment to the workforce who have paid more into that fund are more likely to be paid under the scheme. Under the scheme, entitlement is 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. For example, someone with a yearly average of 48 contributions will qualify for a full pension, whereas someone with a yearly average of 20 will qualify for a pension at 85% of the full rate.

The homemaker’s scheme was introduced in 1994 to make qualification easier for those who took time out of the workforce for caring duties. It allows up to 20 such years in the period since its introduction to be disregarded when the PRSI record is being averaged for pension purposes. Where someone does not qualify for a full rate contributory pension, they may qualify for an alternative payment. If their spouse has a contributory pension, they may qualify for an increase for a qualified adult, amounting up to 90% of a full rate pension, which by default is paid directly to them. Alternatively, they may qualify for a means tested State pension, non-contributory, which amounts to 95% of the maximum contributory pension rate.

Work is under way to replace the yearly average system with a total contributions approach. Under this approach, the rate of pension paid will more closely reflect the number of contributions recorded over a working life. It is expected that this will replace the current system for new pensioners from 2020, although that date is subject to change, as this is a very significant reform with considerable legal, administrative and technical challenges to be overcome in its implementation. When proposals are agreed, legislation will be brought forward to underpin the necessary changes.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Minister for his comprehensive reply. The most important element of it is in the last paragraph, which relates to the proposed changes. This clearly indicates there is recognition of the need to bring about change. I wish to focus on that. In a previous incarnation, I had some influence on a change in the system from that which prevailed previously, where people with less than an average of 22 contributions over their working life got no pension at all. Those who had more than that, received a full pension. It was decided then it was only just to bring about change and introduce a pro ratapension commensurate with the contributions made.

The problem is that people who for economic reasons returned to work since the downturn now find themselves with five or six years extra spent in the workforce. However, this now disqualifies them from a pension. This should not be the case, because they would have already qualified for a limited pension beforehand. Once they had ten years in the workforce previously, their pension was safeguarded. However, once the extra years of service are included, this extends the period in the workforce over their lifetime, from what would have been ten or 12 years to 40 years, 45 years or above, which reduces the average number of contributions over that period, thereby eliminating their access to a contributory pension.

While the 2020 objective is laudable, I strongly urge that special consideration be given to the fact that these women all gave good service in the economy in their lifetimes. I do not believe it is justified in any way that they will be punished for going back to work when they were, in fact, forced to return to work due to economic circumstances at a later stage.

Leo Varadkar (Dublin West, Fine Gael)
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I thank the Deputy for raising this issue and believe the anomaly he pointed out may be dealt with by moving from a yearly average system to a total contributions approach. I understand there is an issue where people return to the workforce. Often we encourage people, particularly nurses, to go back to the workforce in later life and I would not like to see them lose out as a result. The Minister for Social Protection, Deputy Burton, asked me to take this issue on her behalf and I will certainly draw her attention to the Deputy's comments when I see her tomorrow.