Seanad debates

Tuesday, 18 February 2014

Adjournment Matters.

Home-makers Scheme

6:50 pm

Photo of Michael ComiskeyMichael Comiskey (Fine Gael)
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I welcome the Minister for the Environment, Community and Local Government, Deputy Hogan, to the House.

Photo of Marie MoloneyMarie Moloney (Labour)
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I welcome the Minister. I would have preferred it had the Minister for Social Protection been present, but obviously-----

(Interruptions).

Photo of Michael ComiskeyMichael Comiskey (Fine Gael)
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Could we have silence in the Visitors Gallery, please?

Photo of Marie MoloneyMarie Moloney (Labour)
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I would have liked to have seen the Minister for Social Protection, Deputy Burton, attend debate but I will proceed in her absence. I tabled this matter because the budget moved the goal posts as regards qualifying for the State pension. Up to last year, a yearly average of 20 contributions would have given a person 95% of a State pension. With the graduation of rates of pay and bands, however, this is no longer the case. Women in particular have been caught in the cross-fire. I am referring to a cohort of women who gave up working voluntarily to raise their families or because of the marriage bar. They only worked for a few years before they had their families and returned to work after their children were raised. Their yearly averages are reduced by the number of years they spent raising their families.

In April 1994, the homemaker's credit was introduced for women who stayed at home to raise their families. While that is to the good, some women now reaching pension age are being caught in terms of their pensions. Not every woman needed to give up work. Some never returned after raising their families, others are in receipt of widow's pensions and others are financially better off as dependent adults on their husbands' State pensions. I am seeking credits for the small number of women in question in respect of the period 1968 to 1994 so as to increase their State pension rates. I will wait the response of the Minister for Social Protection, on which the Minister present has been briefed, before contributing further.

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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I thank Senator Moloney for raising this matter. As she is aware, the homemaker's scheme was introduced in 1994 to make qualifying for a State contributory pension easier for those who take time out of the workforce for caring duties.

To be eligible for the homemaker's scheme, a person must permanently live in the State, be aged under 66, have started insurable employment or self-employment on or after the age of 16 and before the age of 56, not work full-time - although a person can work and earn less than €38 gross per week - and care for a child under 12 or an incapacitated person on a full-time basis. The scheme allows up to 20 years spent caring for children under 12 years of age or incapacitated adults to be disregarded when a person's social insurance record is being averaged for pension purposes. However, it is important to note that the scheme will not of itself qualify a person for a pension.

The standard qualifying conditions, which require a person to enter insurance ten years before pension age, pay a minimum of 520 contributions at the correct rate and achieve a yearly average of at least ten contributions on their record from the time they enter insurance until they reach pension age, must also be satisfied. For those who do not satisfy these conditions and have an income need a means-tested State pension may be available. The 2007 Green Paper on pensions indicated that to backdate this scheme to 1953, the year when the unified system of social insurance was introduced, would cost the Exchequer some €160 million. Under current rules, costs in relation to this scheme are expected to increase in the coming years due to the increase in female employment rates since 1994.

The National Pensions Framework 2010 proposed a system of homemaker's credits to replace the current disregard. Backdating of this credit to 1994 has been considered as part of the broader pensions reform process, including a move to a total contributions approach to pension eligibility. This means that people reaching pension age could have credits rather than disregards applied to their records to cover periods of care since 1994. This would represent an enhancement, particularly for women, and those who take time out of the workforce for caring duties. However, such an approach would impose additional costs and could only be considered in the context of the wider pensions reform debate and in the context of the budgetary process.

I will convey the Senator's anxiety to have this matter dealt with to the Minister for Social Protection. Perhaps in the context of the budgetary process, a start can be made on the provision of some pension respite or cover to some of these recipients.

7:00 pm

Photo of Marie MoloneyMarie Moloney (Labour)
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I thank the Minister for his reply. I would appreciate if the Minister could raise this matter with the Minister for Social Protection. I also propose to raise it with her. I raised it last week at a meeting of the Joint Committee on Education and Social Protection and at departmental level.

The Minister cited a figures in respect of the cost of this measure. I would like to know how many people are involved. As I have already stated, I do not believe there are as many people involved as people might think. I understand the need for them to have the 520 paid contributions. However, prior to the last budget these people qualified for 95% of the State pension, while having taken the time out for caring duties. I am pleased that today's women will be facilitated by way of the homemaker's credit. However, I would like to push this matter further and ask that it be considered in the context of the budgetary process.