John Deasy (Waterford, Fine Gael)
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Question 152: To ask the Minister for Social and Family Affairs the reason pensioners in receipt of a reduced contributory pension are only granted 50 per cent of the budgetary increases; to give details of the cost to the Exchequer of a 100 per cent increase in a full year; and if he will make a statement on the matter. [18996/06]

Séamus Brennan (Dublin South, Fianna Fail)
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In order to qualify for the maximum rate of the old age (contributory) pension a person must, amongst other qualifying conditions, achieve a yearly average of at least 48 contributions paid or credited on their social insurance record. Reduced pensions are paid to those with yearly averages as low as 10 contributions and arrangements are also in place for the payment of pro-rata pensions to those with mixed rate insurance records or contributions from different countries.

Reduced rate or pro-rata pensions are paid at a fixed percentage of the full rate payment and, in order to ensure that the differential between the various rates is maintained, budget increases are also applied on a pro-rata basis. Applying the full budgetary increase to those with reduced payments would erode the differentials which exist and which are intended to reflect the level of contribution which a person has made to the social insurance fund. The cost of applying the full budgetary increase to all contributory pensioners aged 66 and over is estimated at €34.5 million in a full year.