Bernard Durkan (Kildare North, Fine Gael)
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27. To ask the Minister for Social Protection the extent to which he might be in a position in the context of the programme for Government or otherwise, to examine the extent to which women for one reason or another are deprived of contributory pensions having retired from the workplace while raising their families or due to the marriage ban and who have made a major contribution to society in the course of their working lives; if he will re-examine their cases with a view to crediting them with sufficient contributions to qualify for the State or retirement pension; and if he will make a statement on the matter. [18757/16]

Leo Varadkar (Dublin West, Fine Gael)
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The State pension contributory (SPC) is an old-age benefit, payable from age 66. Eligibility is not dependent upon the recipient retiring from employment, and there is no retirement pension.

The SPC 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-makers 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” and the passage of time means that the potential cost now could be significantly higher.

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.

The Deputy should also note that the ‘marriage bar’ describes a rule that existed in most of the public service and some private sector employments, where women were required to leave their employment upon marriage. This practice was abolished in 1973 when Ireland joined the EEC. As employees in the public service generally paid a reduced rate of PRSI, which provided no cover for the State pension (contributory), the marriage bar would not generally have impacted on State pension entitlement, as they would not have qualified for that payment had they remained in public sector employment. Instead, by impacting upon their continuing public service employment, the marriage bar’s pension implications, where they exist, more generally relate to a person’s eventual entitlement to a Public Service pension. Any questions regarding this issue are a matter for the Minister for Public Expenditure and Reform. amounting up to 95% of the maximum contributory pension rate.

Work is underway to replace the ‘yearly average’ system with a ‘total contributions approach’. Under this approach, the number of contributions recorded over a working life will be more closely reflected in the rate of pension payment received. It is expected that the total contributions approach to pension qualification will replace the current average contributions test for State pension (contributory) 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 components to be put in place prior its implementation. The position of women who were home-makers will be considered very carefully in developing this reform.

Any significant measures that would increase the cost of the State pension would have to be considered in the context of Budget discussions.

I hope this clarifies the matter for the Deputy.