Declan Breathnach (Louth, Fianna Fail)
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744. To ask the Minister for Social Protection if he will address inequalities in the pension system following on from the increase in the required number of contributions needed to qualify, particularly for mothers who took time out of the workforce to care for their children before the homemaker's scheme was introduced in 1994; and if he will make a statement on the matter. [25530/16]

Leo Varadkar (Dublin West, Fine Gael)
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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.

One of the conditions of the State pension contributory is that a person needs a minimum of 520 weekly contributions (i.e. 10 years) paid since entering insurable employment, i.e. between their 16th and 66th birthdays. If a person does not have this minimum number of contributions paid, they will not generally have an entitlement to this particular pension, either at a full or reduced rate. They may, however, claim an alternative support to which they have a higher entitlement.

Since 1961, when contributory pensions were introduced, the 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. Even if someone has only 10 years (520 weeks) of paid reckonable contributions between their 16th and 66th birthdays, they would generally qualify for a State pension (contributory), although the rate payable would vary depending on their circumstances, and it will not always be their most advantageous payment to claim.

The homemaker’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 for periods 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. It should be noted, however, that the scheme does not impact upon the requirement that those in receipt of a State pension (contributory) have paid a minimum of 520 contributions.

Where people who were unattached to the labour market during most of their adult lives cannot 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. 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.

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 around 2020. This is a very significant reform with considerable policy, legal, administrative, and technical elements to be considered in its development and implementation. The position of women who were homemakers will be considered very carefully in this reform.

I hope this clarifies the matter for the Deputy.