Michael Fitzmaurice (Roscommon-South Leitrim, Independent)
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58. To ask the Minister for Social Protection if it is the case that the rate band changes introduced by her on 1 September 2012 militate disproportionately against working women when they reach pension age, as evidenced by the fact that approximately 61% of those negatively impacted by the rate band changes are women, and approximately 39% are men; while she may have sought to ensure that those who contribute more during their working lives benefit to a greater extent at pension qualification age, her views that she has created a moral hazard in the system, in so far as a person who has made no paid contribution whatsoever, and who has made no provision at all for their retirement, may now receive a more substantial pension as a recipient of the State pension (non-contributory) than those persons who have contributed towards the State pension (contributory) having worked intermittently, whenever and wherever possible; if she will act immediately to correct this anomaly; and if she will make a statement on the matter. [18830/15]

Joan Burton (Dublin West, Labour)
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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.

To ensure that the individual can maximise their entitlement to a State pension, all contributions paid over their working life from when they first enter insurable employment until pension age are taken into account when assessing their entitlement and the level of that entitlement. The rate at which a State pension (contributory) is paid at is determined by the average number of contributions paid or credited per year, with tiered rates applying in respect of bands of contributions. For example, to qualify for the maximum personal rate, a person requires a yearly average of 48 or more contributions per year.

While new rate bands for State pension (contributory) were introduced from September 2012, it was already the case that bands existed for different levels of contribution, and that some people qualified for a higher rate of pension on the State pension (non-contributory). Therefore, this is not a new development. A person who qualifies for a reduced rate of SPC below the maximum SPNC rate does so because, in addition to their SPC, they have additional means over and above that contributory pension. If they did not, they would instead be paid the higher SPNC rate. Accordingly, they are not worse off as a result of paying their contributions and the PRSI system continues to provide good value for such workers.

Since the introduction of the State pension (contributory), men have been more likely to have a complete social insurance record than women, and yet, all of the main poverty indicators show that women over 65 experience poverty at the same or lower levels than men of the same age, despite many women having lower lifetime earnings than men. This is a result of the social protection system which awards entitlements based on contributions to the Social Insurance Fund by the claimant or his or her spouse, and provides assistance where people have no such PRSI record. Those with lower earnings and those with lesser contribution histories continue to obtain the best value for money from the Social Insurance Fun, e.g., a person with an average of only 20 contributions per year (i.e. 38% of the maximum) can receive a State pension of €196, i.e., a higher rate than the full rate in 2007.

It is not possible to state to what extent, if any, women were disadvantaged by the changes made in 2012 to new entrants to the State pension (contributory), as most of those whose State pension (contributory) entitlement would have been reduced, and these include both men and women, would have had access to other benefits. Such benefits would be either derived from their spouse’s contribution record, such as the widow’s pension (contributory) or qualified adult increase on his pension, or in their own right, such as the State pension (non-contributory).

Over time, there has been a very significant increase in female participation in the workforce, and this will impact on the gender profile of the various benefits claimed under the Irish pensions system.

For those with insufficient contributions to meet the requirements for a State pension (contributory), they may qualify for a means tested State pension (non-contributory) which has a maximum personal rate of €219, or just over 95% of the maximum rate of the State pension (contributory). Alternatively, if a person’s spouse or civil partner is in receipt of a State pension (contributory) they may instead qualify for an Increase for a Qualified Adult of up to €206.30, which is just less than 90% of the maximum personal rate of the State pension (contributory).