Clare Daly (Dublin Fingal, Independent)
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678. To ask the Minister for Social Protection if, in view of the fact that the introduction of the total contributions approach acknowledges that the previous system threw up unfair anomalies such as, for example, in cases where women subject to the marriage bar are denied a full contributory old age pension despite having more than the minimum number of PRSI contributions and years worked necessary to qualify; and if he will apply this total contributions approach retrospectively in the case of these women, such that women who have well over the minimum number of PRSI contributions necessary to qualify for a contributory pension can gain access to such a pension. [24364/16]

Leo Varadkar (Dublin West, Fine Gael)
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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.

To qualify for a State pension (contributory) a person must satisfy a number of criteria. One of these is that they have at least 520 paid contributions (i.e. 10 years). However this of itself does not qualify someone for a full rate contributory pension. As with such pensions in other countries, there is a separate criterion to decide the rate of payment for those who do qualify.

Since 1961, when contributory pensions were introduced in this State, the 'yearly average' contributions test has been used in calculating the rate of pension entitlement. Entitlement is banded, with the maximum rate payable to those with a yearly average of 48-52 contributions, and the minimum rate payable to those with a yearly average in the range of 10-14 contributions per year.

For those who have insufficient contributions to qualify for a full State pension (contributory), there are supports available in the overall State pension system which assists qualification for a contributory payment, based on factors such as the contributions made by their spouse, and/or other factors likely to impact upon their needs. These include

- The Homemaker’s scheme, which was introduced to make qualification for State pension (contributory) easier for those who take time out of the workforce for caring duties.

- Increases for Qualified Adults.

- Credits for periods of unemployment and illness.

For those who do not qualify for a full rate contributory pension, they may qualify for a means-tested non-contributory pension of up to 95% of the full contributory pension.

It is expected that a total contributions approach (TCA) to pension qualification will replace the yearly average contributions test for State pension (contributory) for new pensioners from 2020. The aim of this approach is to make the rate of contributory pension more closely match contributions made by a person. An important factor in the final design of the scheme will be the treatment of homemaking periods.

This is a very significant reform with considerable legal, administrative, and technical elements in its implementation. When proposals are agreed, legislation will be brought forward to underpin the necessary changes. It is important that the changes be announced well in advance of introduction, to enable those affected to include the new factors into their retirement planning.

While the details of the new system have yet to be finalised, I do believe they will result in a fairer system. However, the Deputy should note that not everyone will see their projected entitlements improve under the new scheme, and there will be some people, who have paid very little into the Social Insurance Fund, who may qualify for a lower rate of payment under TCA than they would have under the yearly average system. People in this situation who had already retired before the introduction of TCA would strongly oppose such a change being imposed upon them, particularly if their means are such that they would not qualify for an alternative benefit at a higher rate of payment.

If, instead, we allow current pensioners to choose the most advantageous system to them, then that would have very significant Exchequer costs. It would mean that a significant number of pensioners would have a higher rate of pension than under the ‘yearly average’ system, but no pensioner would have a lower rate, and the question of how to finance this would arise.

I hope this clarifies the matter for the Deputy.