Brian O'Shea (Waterford, Labour)
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Question 172: To ask the Minister for Social and Family Affairs his proposals to allow those persons whose income before their 56th birthday was below the threshold for liability to pay class S contributions and could not make voluntary contributions prior to their 56th birthdays due to the fact that they did not fulfil the requirements, make voluntary contributions retrospectively in order to qualify for State contributory old age pension; and if he will make a statement on the matter. [8151/07]

Séamus Brennan (Dublin South, Fianna Fail)
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Compulsory social insurance for self-employed workers was introduced in 1988. In the legislation providing for Class S contributions, a general exclusion for people whose total income is below a certain threshold was put in place, similar to that which already existed for employees. The level at which a self-employed person becomes eligible for Class S contributions has remained unchanged over the 19 years since then.

Currently any self-employed person aged between 16 and 66 years and with a total income of €3,174 or more per annum is liable for social insurance contributions at 3 per cent of reckonable income. Contributions made at PRSI Class S provide cover for a range of income replacement benefits — including the state pension (contributory).

The state pension (contributory) is a social insurance payment made to both employed and self-employed persons aged 66 or over, who started paying social insurance contributions before reaching age 56. The standard qualifying conditions for contributory pensions require a person to enter insurance 10 years before pension age, pay a minimum of 260 contributions at the correct rate and achieve a yearly average of at least 10 contributions on their record from the time that they enter insurance until they reach pension age.

Those who are no longer liable for PRSI Class S contributions, for example if reckonable income falls below the €3,174 per annum threshold, may opt to protect pension entitlements by applying to become a voluntary contributor. In order to be admitted to the voluntary contributions scheme, a person must have a minimum of 260 weeks of PRSI paid in either employment or self-employment and apply within 12 months of being insurable. The requirement to have 260 paid contributions to gain access to the scheme ensures that the requisite number of paid contributions required is in place to establish a contributory pension entitlement.

There is no legal basis on which to accept contributions — retrospective or otherwise — apart from where a worker has a liability that is set out in legislation. The Government is committed as part of the Towards 2016 social partnership agreement to publish a Green Paper on all aspects of the pensions system, including social welfare pensions. It is expected that the Green Paper will be finalised around the end of March, 2007, and published shortly thereafter. A consultation process will then take place and the Government will respond to this by publishing a framework for future pensions policy.