Michael Creed (Cork North West, Fine Gael)
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Question 291: To ask the Minister for Social Protection if she will clarify the value of credited PRSI contributions in the context of entitlement to contributory pension on retirement; and if she will make a statement on the matter. [34175/11]

Joan Burton (Dublin West, Labour)
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Credited contributions ("credits") form an integral part of the social insurance system. They are underwritten by the Social Insurance Fund and are designed to protect the social insurance entitlement record of insured workers who – for reasons relating to incapacity, ill-health, unemployment, early retirement, professional training or the provisions of care (i.e. for children, the disabled or the elderly) – are not in a position to make PRSI payments.

In relation to State pension, there are two categories of contributory State pension:- State pension (transition) (SPT) payable at age 65 and State pension (contributory) (SPC) payable at age 66.

The qualifying conditions for State pension (transition) require the applicant to

· have entered insurable employment before attaining the age of 55 years.

· have at least 260 full-rate social insurance contributions paid since the date of entry into insurance.

· Have a minimum yearly average of 24 contributions (paid or credited) since the date of entry into insurance.

· have retired from work.

State pension (transition) ceases at age 66 when the claimant transfers to (SPC).

The qualifying conditions for State pension (contributory) require the applicant to

· have entered insurable employment before attaining the age of 56 years.

· have at least 260 weeks full-rate contributions paid, from employment or self-employment, since entry into insurance

· Have a minimum yearly average of 10 contributions (paid or credited) since the date of entry into insurance.

As provided for in legislation since 1997, the minimum paid requirement for SPT and SPC will increase to 520 next year.

As announced in the National Pensions Framework and as provided for in recent legislation, State pension age will be increased gradually to 68 years. This will begin in 2014 with the standardisation of State pension age at 66 and SPT will no longer be payable to those who reach age 65 in 2014 or later. State pension age will be increased to 67 years in 2021 and to 68 in 2028. By gradually increasing the qualifying age for State pension, people will be further encouraged to remain in employment beyond 65 years of age.

A further planned change outlined in the National Pensions Framework is the introduction of a 'total contributions' approach from 2020 to replace the current averaging system. This means that from 2020 a person will require 30 years' contributions and credits to qualify for maximum pension with 10 years' paid contributions required for a minimum pension. The amount of credits which can be used to claim pension will be capped at 10 years.

This system will be fairer as the level of pension payment will be proportionate to a person's working career e.g. a person with 25 years contributions will receive 25/30ths of a pension.