John Halligan (Waterford, Independent)
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173. To ask the Minister for Social Protection her views on making a provision for the backdating of credits for women who took time out from the workforce prior to 1994 - when the homemaker scheme was introduced - to raise their families in order to enable those women to accumulate the required 520 contributions to qualify for the full State pension; the number of women that would be affected by this backdating; her views that this will have a very serious impact on these women's retirement income; the cost to the State; and if she will make a statement on the matter. [40252/14]

Joan Burton (Dublin West, Labour)
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The homemaker’s scheme was introduced in 1994 to make qualification for SPC 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 calculated for pension purposes. The effect of this is to reduce the number of years by which the person’s contributions are divided, thereby increasing their yearly average, making it easier for them to qualify for a maximum rate SPC. It does not involve the award of credits for the duration of the period spent on caring duties.

To be eligible for the homemaker’s scheme, a person must:

- Permanently live in the State (exception may be made where EU regulations apply),

- Be aged under 66,

- Have started insurable employment or self-employment before the age of 56,

- Not work full-time, although for the purposes of this scheme, a person can work and earn less than €38 gross per week,

- Care for a child (under 12) or an incapacitated person on a full-time basis.

It is important to note that the homemaker’s scheme will not, of itself, qualify a person for a SPC. The standard qualifying conditions for the SPC must also be satisfied. These require a person to enter insurable employment at least ten years before pension age, pay a minimum of 520 contributions at the correct rate (credited contributions do not satisfy this condition) and achieve a yearly average of at least 10 contributions paid or credited on their record. The requirement to have 520 paid contributions (an increase from 260) has been provided for in legislation since 1997, and took effect from April 2012.

The 2007 Green Paper on Pensions indicated that to back-date the homemakers scheme to 1953, the year when the unified system of social insurance was introduced, would cost the Exchequer some €160 million per annum. Costs in relation to this scheme, under the current rules, are expected to increase in the coming years due to the increase in female employment rates since 1994.

Where someone age 66 or over does not satisfy the conditions to qualify for a SPC, or qualifies for less than the maximum rate, they may instead qualify for one the following:

- The means-tested State pension (non-contributory). The maximum personal rate of this pension is €219, which may be payable if their means are no more than €30 per week. A reduced rate may be payable if their means are no more than €245 per week. A living alone allowance may also be paid, where applicable.

- If a spouse receives the SPC, the other spouse may receive a payment, known as an increase for qualified adult (IQA), which may be up to €206.30 per week.

- If widowed, they may qualify for a widow's contributory pension, which they may claim either based on their spouse’s or their own social insurance record. The qualifying conditions for this require fewer contributions paid (260) than the SPC, and the maximum personal rate for those aged 66 or over is €230.30.

Where a person qualifies for more than one of the above payments, they are paid under the pension that is most advantageous to them.

People over 66 may be eligible for household benefits (worth €680 per year from 2015) and fuel allowance (worth €520 per year). They may also qualify for free travel and assistance with their rent, depending on their circumstances.

Under the pension reform programme, it is planned to adopt a total contributions approach where the number of contributions paid over a work life will closely reflect the rate of payment received. This approach was endorsed by the OECD Review of the Irish Pension System, which was published in April 2013. It has been planned to introduce this change in 2020, although this date may change. The position of women, including those who qualify for the homemaker’s scheme, will be considered carefully in the context of this reform.