Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

341. To ask the Minister for Social Protection the reason for situations (details supplied) arising in relation to the entitlement to State pension; if he will review the situation; and if she will make a statement on the matter. [32179/14]

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context | Oireachtas source

The State pension (contributory) 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. This is particularly important given the challenges in relation to the future sustainability of the State pension, with increased numbers of older people living longer.

When assessing whether an individual is entitled to a State pension (contributory), and to ensure that they can maximise such entitlement, all contributions (paid or credited) from when they first enter insurable employment until pension age are taken into account.

Once over 16 years of age, the date a person enters into insurable employment is taken as the date used for averaging purposes in order to qualify for a State pension (contributory).

To qualify for a state pension a person must –

- have at least 520 paid contributions and

- satisfy a yearly average condition (a yearly average of 48 contributions paid or credited is required for a full rate pension, and reduced rates of payment may be payable for pensioners with lower averages).

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.

For those with insufficient contributions to qualify for a full or partial State pension (contributory), the social protection system already provides alternative methods of supporting such pensioners in old age. The homemaker’s scheme was introduced in 1994 to make qualification for State pension (contributory) easier for those who take time out of the workforce for caring duties. The scheme allows up to 20 years spent caring for children under 12 years of age or incapacitated people to be disregarded when a person’s social insurance record is being averaged for pension purposes.

In addition, persons who have insufficient contributions to qualify for a full State pension (contributory), may qualify for a means tested State pension (non-contributory). Furthermore, some affected persons may be entitled to a qualified adult increase on their spouse’s/partner’s pension payment. This increase is paid directly to the qualified adult.

The success of all of these measures across the entire State pension system, in ensuring equality of outcomes for men and women, is evidenced by the poverty statistics, which show that women over the age of 65 are less likely to be in poverty than men of the same age.

The most recently published Actuarial Review of the Social Insurance Fund confirms that the Fund provides better value to female rather than male contributors. It found that those with lower earnings and those with shorter contribution histories will continue to obtain the best value from their contributions.

A total contributions approach to pension qualification will replace the current average contributions test for State pension (contributory) in 2020, although that date is subject to change. Under this approach, 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. Issues such as equality of outcomes for women and men, including those who spend some years outside the labour market on caring duties, will be considered carefully in the context of that reform.