Mary Upton (Dublin South Central, Labour)
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Question 381: To ask the Minister for Social and Family Affairs his views on addressing the problem whereby people on the State pension receive disproportionately more money than some people on a [i]pro rata[/i] State pension; and if he will make a statement on the matter. [36129/06]

Séamus Brennan (Dublin South, Fianna Fail)
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The social welfare system comprises two types of pension; contributory pensions based on social insurance contributions and non-contributory pensions, payment of which are subject to a means test. The maximum contributory pension is paid at a slightly higher rate; however, the main advantage of contributory pensions is that they are paid regardless of any other income a person might have.

In order to qualify for the maximum rate of the state (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. The scheme also features a range of reduced rate pensions, which are designed to ensure that the contributions people have made to the social insurance fund receive appropriate recognition. The range of reduced payments has been expanded over the years to allow more people to qualify for a contributory pension.

With regard to non-contributory pensions, the new state pension (non-contributory) was introduced in September and replaces the old age (non-contributory) pension and, for recipients aged 66 and over, blind pension, widow/er's pension, one parent family payment, deserted wife's allowance and prisoner's wife's allowance.

The non-contributory scheme is a social assistance measure which is intended to provide a basic income to those with no, or very limited, means. Qualification is based on a person satisfying a means test and the rate of payment depends on the level of means which are assessed. At present the rate of payment can, depending on means, range from a maximum of €182 per week to as low as €4.50 per week.

As already indicated, the main advantage of the contributory over the non-contributory payment is that it is paid regardless of other means. It is, of course, open to those on reduced rate contributory pensions to apply for a non-contributory pension and their means would be assessed to determine the level of pension to which they would be entitled. If this rate is higher than the rate of contributory pension to which they are entitled then the contributory pension would be discontinued in favour of the higher rate pension.