Finian McGrath (Dublin North Central, Independent)
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To ask the Minister for Social Protection the reason for the drop in the social pension for those that do not meet the full points, that is up to 31 August those with 36.9 points received €225.80 and then on 1 September €207 which is over a 9% drop; the reason for the drop in this particular pension. [51989/12]

Joan Burton (Dublin West, Labour)
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There is an important context to the changes to State pension provision under the pensions reform programme. Given the scale of the fiscal crisis and because spending on social protection accounts for nearly 40% of current Government expenditure, you will appreciate that savings have to be found in the social welfare system.

The change to State pension rate bands means that the pension in payment will reflect the PRSI contributions made over a working life. Currently a person with an average of 20-47 PRSI contributions per year over their working life receives a weekly State pension of only €4.50 less than a person with a yearly average of 48 or more PRSI contributions. This is neither fair nor equitable.

From September 2012, a lower pension is payable to new applicants for State pension who have a yearly average of less than 48 PRSI contributions. This measure introduces additional rates bands for State pension to more fairly reflect the proportionality of attachment to the workforce by the claimant. The maximum rate will remain unchanged and the rate payable to people with an average of between 40 and 47 contributions per year will also remain unchanged. However, those who have fewer contributions, such as those in the scenario mentioned by the Deputy, will receive a lower rate of pension.

Claimants with an income need, may, following a means test, qualify for a State pension (non-contributory). The maximum rate of the (State pension non-contributory) is €219.00 per week.

This change to rate bands introduced in September 2012, moves somewhat closer to a ‘total contribution approach’ where those who pay more will benefit more. The ‘total contributions approach’ to State pension will be adopted to replace the current averaging system and the proposed date for its introduction is 2020. Under this system, the level of pension paid will be directly proportionate to the number of social insurance contributions made by a person over his or her working life.

There is also an important long-term policy context for the proposed changes to State pension as the challenges facing the Irish pension system are significant. There are currently six people of working age for every pensioner and this ratio is expected to decrease to approximately two to one by 2050. People aged 65 years and over will account for a greater proportion of the population while the proportion of working age is expected to decline. People are living longer with healthier lives and growing numbers of people want to work, or may need to work beyond State pension age. This has obvious and significant implications in relation to the future costs of State pension provision. Therefore, the task of financing increasing pensions will fall to a diminishing share of the population.

The State pension is the bedrock of the Irish pension system, and these reforms are essential to address the challenges of increasing life expectancy and to ensure its sustainability. The Government’s priority is to secure economic recovery, promote growth and employment. To this end, the State must pursue a determined deficit reduction strategy and the pension reform measures underway contribute significantly to this strategy.

All information relating to the changes that I have outlined here is also available on my Department’s website.