Brendan Smith (Cavan-Monaghan, Fianna Fail)
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17. To ask the Minister for Social Protection his proposals to amend the legislation and regulations pertaining to eligibility for the State contributory pension in relation to the calculation of the average yearly social insurance contributions which can adversely affect persons who were in insurable employment, left that employment in many instances for family reasons, returned to insurable employment and have their average contributions calculated from the time they first entered insurable employment; if his attention has been drawn to the fact that many persons have been denied full rate of payment due to this method of calculation; and if he will make a statement on the matter. [28738/16]

Leo Varadkar (Dublin West, Fine Gael)
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The State pension contributory is one of a number of pensions the State pays to people over 66. The rate of payment to a person is related to the number of contributions made over the years into the Social Insurance Fund by the person. Entitlement levels are calculated by means of a ‘yearly average’ calculation, where the total contributions paid or credited are divided by the number of years of the working life. Payment rates are banded. For example, someone with a yearly average of 48 contributions will qualify for a full pension, whereas someone with a yearly average of 20 will qualify for a pension at 85% of the full rate.

The homemaker’s scheme was introduced in 1994 to make qualification easier for those who took time out of the workforce for caring duties. It allows up to 20 such years, in the period since its introduction, to be disregarded when their record is being averaged for pension purposes.

Where someone does not qualify for a full rate contributory pension, they may qualify for an alternative payment. 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), which amounts up to 95% of the maximum contributory rate.

It is planned that a total contributions approach will replace the yearly average approach from around 2020, and the position of homemakers will be carefully considered in the context of that reform.

I hope this clarifies the matter for the Deputy.