Willie O'Dea (Limerick City, Fianna Fail)
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106. To ask the Minister for Social Protection if she will consider amending the legislation pertaining to what appears to be an unfair and inequitable aspect of the State contributory pension provision whereby an applicant is penalised for working during teenage school-going years by the inclusion of these years when averaging lifetime contributions on reaching pension age; and if she will make a statement on the matter. [7120/14]

Joan Burton (Dublin West, Labour)
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The State pension is a very valuable benefit and is the bedrock of the Irish pension system. Therefore, it is important to ensure that those qualifying have made a sustained contribution to the Social Insurance Fund over their working lives and the reform measures introduced to date go somewhat toward that goal. To ensure that the individual can maximise their entitlement to State pension all contributions paid over their working life from when they first enter insurable employment until pension age, is taken into account when assessing whether they are entitled to State pension and the level of their State pension entitlement.

Once over 16, the date a person enters into insurance is taken as the date used for averaging purposes in order to qualify for a State pension.

To qualify for a state pension a person must:

have at least 520 paid contributions and

satisfy a yearly average (a yearly average of 48 is required for a full rate pension).

The yearly average test has been in existence since 1961 when contributory pensions were first introduced. The scheme was designed with a view to ensuring that people could qualify for contributory pensions immediately and to suit a system where social insurance coverage was limited.

Under the pension reform programme, there is a plan to adopt a total contributions approach where the number of contributions paid over a work life will closely reflect the rate of payment received. For example, 30 years contributions (1560) could qualify a person for maximum State pension (contributory). A person would accumulate 1/30th of a pension for each year of contributions up to a maximum of 30/30ths inclusive of a certain number of credits. The introduction of new rate bands in September 2012 moves somewhat closer to this process. It had been planned to introduce this change in 2020 but in the context of changing demographics and longer working, this date may be brought forward.

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.

An increase for a qualified adult, which is a means tested payment may be made to an individual who does not qualify for a pension in their own right or qualifies for a lower rate of pension due to gaps in insurance or the means tested non-contributory pension may be available to an individual who meets the qualifying criteria.