Brendan Griffin (Kerry South, Fine Gael)
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387. To ask the Minister for Social Protection if she plans to reform the way social insurance contributions are calculated for the State pension in view of the unfair averaging system in place; and if she will make a statement on the matter. [40729/13]

Joan Burton (Dublin West, Labour)
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The State pension is a very valuable asset and it is important, that those who receive it have made a significant contribution towards it during a working life as the State needs to ensure that it can continue to sustain pension payments in the future. The average contributions test is used in calculating pension entitlement and has been in existence since 1961 when contributory pensions were first introduced. The system was designed with a view to ensuring that people could qualify for contributory pensions from the outset rather than waiting for contributions to build up, and to suit a system where social insurance coverage was limited and people could move in and out of coverage as a result of the nature of their employment and/or their earnings.

In terms of future reforms it is planned to introduce a ‘total contributions approach’ where pension payment made will more closely reflect contributions made over a working life. This approach envisages a total contributions requirement of 30 years contributions for a maximum pension. In introducing such a system, it is considered appropriate to have regard to the potential that people now have to accumulate a contribution record of 40-50 years contributions as a result of the comprehensive nature of social insurance coverage, the existence of voluntary contributions, the homemakers scheme which recognises periods of caring and the facility of awarding credited contributions to employee in times of unemployment or illness. The OECD Review of the Irish Pension System which was published in April 2013 also endorsed the move to a total rather than an average contributions test to determine entitlement to a State pension.