Written answers

Tuesday, 14 November 2006

Department of Social and Family Affairs

Pension Provisions

9:00 am

Photo of Willie PenroseWillie Penrose (Westmeath, Labour)
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Question 393: To ask the Minister for Social and Family Affairs if he has received correspondence from a person (details supplied) who has made positive suggestions as to how to deal with anomalies that have arisen with regard to the pre-1953 pension from the perspective of the wrong formula being used and the credits not being used; if in this context their proposal to replace the pre-1953 pension with effect 4 January 2006 by way of the senior citizens special pension will be examined; and if he will make a statement on the matter. [37559/06]

Photo of Séamus BrennanSéamus Brennan (Dublin South, Fianna Fail)
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I have received and noted the correspondence referred to by the Deputy. In considering eligibility for contributory payments it is necessary to uphold the contributory principle which underpins entitlement. This requires, amongst other things, that people make a minimum level of contribution to the social insurance system. The pre-1953 pension is one of a number of special pensions introduced to provide a payment for people who could not satisfy the standard qualifying conditions and could not, therefore, qualify for any pension.

In deciding on the qualifying conditions for such special pensions I think it is reasonable to expect a minimum level of paid contributions that is at least equivalent to that which is expected of those qualifying for standard rate payments. At present the minimum paid requirement for standard payments is 260 contributions and this was applied to the pre-1953 and other pensions such as that provided for self employed who were already over 56 years of age when compulsory social insurance was introduced for the self employed in 1988. Accordingly, the use of credited contributions, as suggested by the person in question, to make up the basic paid requirement would not, I consider, be appropriate.

Where a person has social insurance contributions from another EEA country, or a country with which Ireland has a bilateral agreement, these can also be used to qualify a person for a payment. The manner in which contributions from EEA countries are to be used is laid down in Regulation (EEC) No. 1408/71 and the same general principles are applied in the reciprocal agreements Ireland has with a number of other countries.

These Regulations provide that where the conditions required by the legislation of a country for entitlement to old age benefits are satisfied only after counting the contributions made in another country, the first country shall calculate the amount of pension the person would be entitled to if s/he had completed his/her full career of periods of insurance under the legislation of that country. Then the proportional pension is calculated by multiplying the theoretical amount of pension by the ratio of periods of insurance in that State to the person's full career.

The person concerned had originally sought a change in these Regulations and Agreements to provide that the pre-53 pension paid should be based on the proportion of Irish contributions contained in the basic requirement of 260 paid contributions as this would result in a higher pro-rata rate being paid. Similar arguments could also be applied to standard pro-rata pensions, as people can often have more contributions than required to satisfy the theoretical rate for which they qualify. A change in the manner in which contributions from other countries are counted would require an amendment to EU regulations and bilateral treaties.

As already indicated, the pre-53 pension is a special measure designed to provide a pension to people who would not otherwise qualify for any payment. I consider that, as implemented, the scheme is being operated in accordance with legislation and is a fair response to the representations which led to its introduction. Major changes to legislation and EU regulations to change the basis of calculation of pro-rata pre-53 pensions could not be justified.

Increases in pensions to be announced in the forthcoming Budget will be applied in the normal way to pre-53 pensions. However, the introduction of a new pension, as suggested, incorporating the cost equivalent of the household benefit package and at an enhanced 75% of the maximum rate, would be extremely costly and would have implications for other payments made abroad as well as reduced payments made here. In the circumstances, there are no plans to introduce a pension along the lines suggested.

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