Written answers

Wednesday, 20 April 2016

Department of Social Protection

State Pension (Contributory) Data

Photo of Seán FlemingSeán Fleming (Laois, Fianna Fail)
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54. To ask the Minister for Social Protection the number of A1 contributions a person requires to achieve a full State contributory pension; the average number of contributions per year that a person requires to qualify for a payment less than the full amount; when these specific yearly averages were introduced; the yearly averages that applied prior to this change; and if she will make a statement on the matter. [7547/16]

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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The State pension (contributory) is one of the State pension schemes, and its rate of payment is related to contributions made over years into the Social Insurance Fund. As such, those with a stronger attachment to the workforce, who have paid more into that fund, are more likely to be paid under that scheme. There are a number of criteria which must be satisfied in order to qualify for a State pension contributory. These include that the person must be aged 66 or over, and that they have at least 520 paid contributions at class A, E, F, G, H, N or S, i.e., a minimum of 10 yearsof paid contributions.

Since 1961, when contributory pensions were first introduced, the ‘yearly average’ contributions test has been used in calculating the level of pension entitlement, where the total contributions paid or credited are divided by the number of years of the working life (from their entry into insurable employment up to the year prior to their reaching State pension age). Payment rates are banded, on the basis of this calculation.

“Developing the National Pensions System – Final Report of the National Pensions Board” published in 1993, recommended that the number ofpaidcontributions required to qualify for a contributory pension should be increased to 520 and the necessary legislation to effect these recommendations was contained in Section 12 of the Social Welfare Act 1997 which provided for their implementation in two stages, with the paid contribution requirement being standardised at 260 from 2002, rising to 520 from April 2012.

As provided for in Budget 2012, from September 2012, new rate bands for State pension (contributory) were introduced for new pensioners as follows -

Yearly average PRSI contributionsPersonal rate per week, €
48 or over 233.30
40-47228.70
30-39209.70
20-29198.60
15-19152.00
10-1493.20

The bands in place before this change remained in place for existing pensioners (who qualified before 1 September 2012), and their rates of pension are now as follows -

Yearly average PRSI contributionsPersonal rate per week, €
48 or over233.30
20 - 47228.70
15 - 19 175.00
10 - 14116.70

The additional bands now in place more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life will, generally, benefit more in retirement than those with lesser contributions.

It should be noted that, where people cannot qualify for a full rate contributory pension as a result of an intermittent PRSI record, the social protection system provides alternative methods of supporting such people in old age. For example, 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.

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