Joan Burton (Dublin West, Labour)

Application to become a voluntary contributor must be made within one year of the last paid or credited contribution, which is possibly where the woman concerned had the problem. Historically, the entry requirements in terms of minimum number of paid contributions for the VC scheme has always matched the paid contributions requirement for State pension contributory. The purpose of the VC scheme is to protect the pension entitlements of those who have already satisfied this first condition for State pension contributory by maintaining or in some cases improving the yearly average number of contributions. The voluntary contributions are, therefore, reckonable towards the State pension contributory.

The scheme is aimed at ensuring that individuals who leave the workforce prior to pension age and have already established a future entitlement to the contributory State pension upon reaching retirement age can maintain their social insurance record by paying voluntary contributions in the intervening period. Legislation enacted in 1997 provided for an increase in the minimum number of paid contributions required for the State pension contribution to 520 in respect of applicants who reach pension age on or after 6 April 2012. This dates back a long time. Accordingly, an increase in the minimum number of paid contributions for access to the voluntary contribution is required. Failure to increase the entry requirement for the VC scheme would mean that individuals who fell short of the 520 paid contribution conditions for SPC purposes could make up any shortfall by the payment of voluntary contributions. This would undermine the rationale behind the changes to the SPC requirements and limit the effectiveness of the increase in the number of SPC paid contributions by impacting negatively on the cost savings arising from the change. Furthermore, it would be anomalous that the option to pay voluntary contributions could not be availed of by those in receipt of credits because of an underlying social welfare entitlement.

The increased contributions will be phased in in the period from April 2013 to April 2015 as follows: up to April 2013, there will be 260 contributions. From April 2013 this will change to 364 contributions; in April 2014 to 468 contributions, and in April 2015 and beyond to 520 contributions. The necessary phasing in provision is being provided for. There are 3,200 voluntary contributors, of whom 75% or 2,400 are former self-employed individuals, with the balance of 800 being made up by those living overseas or former modified rate contributors. Based on the profile of those who have applied to access the scheme in the past three years, it is estimated that the increase in 2013 to 364 contributions will potentially affect 100 people, that the increase in 2014 to 468 contributions will affect a similar number, and that the increase in 2015 to 520 contributions will have little or no impact on any number of people.