Finian McGrath (Dublin North Central, Independent)
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40. To ask the Tánaiste and Minister for Social Protection to end discrimination of older women when applying for the State pension (details supplied); and if she will make a statement on the matter. [3376/16]

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 or credited 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. Since 1961, when contributory pensions were 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. In this context, even if someone has only 10 years (520 weeks) of paid reckonable contributions between their 16th and 66th birthdays, they may qualify for a State pension (contributory), although the rate payable would vary depending on their circumstances.

The home-maker's scheme makes qualification for a higher rate of 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, allows 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, subject to the standard qualifying conditions for State pension contributory also being satisfied. This has the effect of increasing the yearly average of the pensioner, which is used to set the rate of their pension. The scheme does not involve the award of credits.

The 2007 Green Paper on Pensions estimated an annual cost of backdating the Home-maker's scheme, at that time, as €150 million (if to 1973) or €160 million (if to 1953). However it described those estimates as “extremely tentative” due to a number of factors, e.g., the fact that the cost would include, not just people resident in the State, but also many others resident in other countries, such as the UK. Given the cost that would be involved, the Green Paper did not propose that such backdating be introduced. Backdating the scheme now, for existing pensioners, could be expected to be significantly more expensive because (a) there are some 50% more contributory State pensioners now than there were in 2007, (b) the rate of the pension has increased since 2007 by 11%, and (c) the current cohort of people reaching pension includes more women who have had a significant level of insurable employment and would therefore be in a position to benefit from the home-maker's scheme. The cost would also be expected to increase each year in the coming years.

It is worth noting that the Actuarial Review of the Social Insurance Fund in 2012 confirmed that the Fund provides better value to female rather than male contributors. This is due to the distributive nature of the Fund. For example, those with a yearly average of only 20 contributions (38% of the maximum) may qualify for 85% of the maximum rate. The Review also examined the changes in the contribution rules and the associated rates of payment which were to be introduced in September 2012. The Review found that those with lower earnings and those with shorter contribution histories still obtain the best value from their contributions.

Where people who were unattached to the labour market during most of their adult lives may not qualify for a contributory pension in their own right as they have paid few or no contributions, or cannot qualify for a full rate as a result of an intermittent PRSI record, the social protection system provides alternative methods of supporting such pensioners in old age. Therefore, 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 up to 95% of the maximum contributory pension rate.