Regina Doherty (Meath East, Fine Gael) | Oireachtas source

I thank the Cathaoirleach for his kind words. It is an honour to be in this House. This is my first time here as a senior Minister and I am very privileged to attend.

I thank Senator Gallagher for rasing this issue. He is aware that I was only given the brief for my new role a week ago. I am currently being briefed on the entirety of the Department's brief and amalgamating the role of responsibility for employment into the new Department of Employment and Social Protection. My statement on this matter is factual in so far as it reflects the current position. I will read it into the record of the House and we can then perhaps have a brief discussion on my ambitions in this area.

There are several ways to qualify for a State pension. The rate of payment under the State pension contributory scheme is related to contributions paid over the years into the Social Insurance Fund and credited contributions where applicable. As such, those with a stronger attachment to the workforce and who have paid more into that fund are more likely to be paid at a higher rate than those who made lesser contributions during their working life.

Since the contributory pension was introduced in 1961, the yearly average contributions test has been used in calculating the level of pension entitlement. The total contributions paid or credited are divided by the number of years of working life from a person's entry into insurable employment up to the year prior to his or her reaching State pension age. There are a number of criteria which must be satisfied in order to qualify for a contributory pension, whether at full or reduced level. These include that the person must be aged 66 or over and have paid at least 520 contributions. Payment rates are banded. For example, a person with a yearly average of 48 contributions will qualify for a full pension, whereas a person with a yearly average of 40 will qualify for a pension at the 98% rate. A person with a yearly average of only ten contributions will still qualify for the minimum rate of €93.20. There is a misconception among some that the yearly average approach is unique in paying a higher rate of contributory pension to those with less significant gaps in their record. However, all contributory pensions operate on that basis, with the objective being to reward those who contribute most frequently to the fund which pays for those pensions.

The homemaker's scheme, which was introduced in 1994, makes qualification easier for those who took time out of the workforce on caring duties that many people undertake in respect of children or elderly parents. It allows for up to 20 such years in the period since its introduction to be disregarded when the yearly average is calculated, thus making it easier to qualify for a higher rate of payment. Those with insufficient contributions to meet the requirements for a State pension contributory may qualify for a means-tested non-contributory State pension, the maximum personal rate for which is €227. Alternatively, if a person's spouse has a contributory pension, he or she may qualify for an increase for a qualified adult, amounting to up to 90% of a full-rate pension, which by default is paid directly to him or her.

The national pensions framework proposed that a total contribution approach should replace the yearly average approach. Under this approach, the rate of pension paid would more closely reflect the total number of contributions. The position of those who have gaps in their records is being carefully considered in developing this scheme. It is expected that this approach to pension qualification will replace the current one from 2020 or thereabouts. Following completion of the actuarial review of the Social Insurance Fund later this year, a refined total contribution approach proposal will be developed.Following a consultation process, I will submit a proposal to Government seeking the review and a new approach.

The current band rate applying to the State pension were introduced from September 2012, replacing the rates introduced in 2000. The revised rate bands reflect the social insurance contributions history of a person more closely, although alternative payments are available for those with small additional means. It is estimated that to revert to the previous bands would cost at least €60 million in 2018.

We are all aware that we do not have the money to do everything we want to do, so we have to be very careful. Having said that, in my primary job as a Deputy, one of the most contentious issues that comes across my desk and one that I have not been able to resolve in the last number of years is this particular issue, particularly for people who do not reach the minimum threshold of the ten credits. That is because of the averaging from the beginning and the end. I assure Members that this is a priority for me. I do not know how I will fix it yet, given the amount of money that would be needed to do exactly what we would like to do, but I can provide 100% assurance that this is a priority. It is not fair that people who have an average of nine weeks get nothing whereas those with an average of ten weeks get €93. The system that we have should mean that if one pays into it one should be paid back, even on a sliding scale. The only commitment I can give is that I am going to do my level best to bring that review and the changes that we had anticipated making, which are projected into 2020, will be a priority for me. I will be looking at it to see what options are available to me to address this issue as soon as I can.