Mick Wallace (Wexford, Independent)
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80. To ask the Tánaiste and Minister for Social Protection if she is satisfied that changes in recent years to the State Pension (Contributory) Scheme have not disproportionately penalised those with gaps in their pension contributions; and if she will make a statement on the matter. [40150/15]

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. Since 1961, when contributory pensions were first introduced, the average contributions test has been used in calculating pension entitlement. Once over 16 years of age, the date a person enters into insurable employment is the date used for averaging purposes.

A number of changes have been made to the State Pension Contributory in recent years in the context of State pension reform and to provide for sustainable pensions. As provided for in Budget 2012, from September 2012, new rate bands for State pension were introduced. These additional payment rate bands more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life benefit more in retirement than those with lesser contributions, if they are paid under the State pension (contributory) scheme.

The social protection system provides alternative methods of supporting such pensioners who have been less attached to the workforce. The homemaker’s scheme makes qualification for State pension (contributory) easier for those who take time out of the workforce for caring duties. The scheme, which was introduced in and took effect from 1994, may allow up to 20 years spent caring for children under 12 years of age (or caring for incapacitated people over that age) to be disregarded when a person’s social insurance record is being averaged for pension purposes.

Where someone does not qualify for a full rate contributory pension, they may qualify for an alternative payment. If their spouse has a contributory pension, they may qualify for an Increase for a Qualified Adult amounting up to 90% of a full rate pension, which by default is paid directly to them. Alternatively, they may qualify for a means-tested State Pension (non-contributory), amounting to 95% of the maximum contributory pension rate.

Work is under way to replace the ‘yearly average’ system with a ‘total contributions approach’. Under this approach, the rate of pension paid will more closely reflect the number of contributions recorded over a working life. It is expected that this will replace the current system for new pensioners from 2020, although that date is subject to change, as this is a very significant reform with considerable legal, administrative, and technical challenges to be overcome in its implementation. When proposals are agreed, legislation will be brought forward to underpin the necessary changes.