Tommy Broughan (Dublin North East, Labour)
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Question 177: To ask the Minister for Social and Family Affairs if he will review the formula used to determine State pension entitlements in view of concerns raised regarding the situation whereby an applicant with lower full rate and modified insurance entitlements may receive a larger State pension than an applicant with higher full rate and modified rate contributions (details supplied); and his views on whether this anomaly is fair. [33188/07]

Martin Cullen (Waterford, Fianna Fail)
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The current system of mixed rate pro-rata pensions was introduced in 1991 and was designed to ensure that people who have contributed to the social insurance system at different rates receive a pension which reflects the proportion of full rate contributions which exists in their overall insurance record.

The pension is calculated by taking the total number of contributions (modified and full rate) a person has paid over the working life and applying the average contributions test to arrive at the rate which would be paid if all contributions were at the full rate. The actual rate to be paid is determined by the proportion of full rate contributions in the overall record. A similar arrangement applies when calculating pensions due under EU regulations or bilateral social security agreements.

I am satisfied the formula used at present achieves its objectives and ensures that people receive a pension which reflects the proportion of full rate contributions contained in their overall contribution record. However, in common with other types of contributory pension, there are issues in relation to the operation of the average contributions test, which can give rise to the type of inconsistencies raised by the Deputy.

The recently published Green Paper on Pensions includes a discussion on various issues relating to social welfare pensions including the operation of the average contributions test. A consultation process on the Green Paper is now underway and will remain open until mid 2008. The Government will respond to the views expressed during the consultation process by publishing a framework for future pensions policy and I expect that this will be available towards the end of next year.