Seán Fleming (Laois, Fianna Fail)
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220. To ask the Minister for Social Protection if he will consider including in the Social Welfare Bill provision for the small number of persons who are in receipt of the half rate pension for self-employed persons to increase the pension for those persons who have more than 260 full rate contributions but may have not had the full 520 contributions to give them a pension pro rata to their contributions for the ten years that it was possible to be in the system, as opposed to a half rate pension that they receive whereas some of them have contributions in excess of five full years and would entitle them to a higher pension, in view of the fact that this scheme was only introduced in April 1999; and if he will make a statement on the matter. [33370/16]

Leo Varadkar (Dublin West, Fine Gael)
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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, i.e., a minimum of 10 years of 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).

Social insurance contributions (Class S PRSI) were introduced for self-employed people on 6 April 1988. These contributions provide cover for self-employed people for long-term benefits such as State pension (contributory) and widows/widowers pension (contributory). In addition to the qualifying conditions above, a person must have paid self-employment contributions in respect of at least one contribution year prior to reaching age 66, and all self-employment contributions payable must have beenpaid in full.

There is also a State pension (contributory) half-rate pension for self-employed people. The legislation providing for this partial pension came into effect from 9 April 1999 to provide a basic payment for groups who would not otherwise qualify for a contributory social welfare pension, and who did not satisfy the means test for the State pension (non-contributory). In this case, the measure was designed to benefit self-employed people who were already over 56 years of age when compulsory self-employed social insurance was introduced in 1988, who had not paid other contributions (such as voluntary contributions, or other contributions while in employment), and who could not therefore satisfy the condition of having entered insurance 10 years before pension age. The pension requires a minimum of 5 years contributions and is payable at 50% of the standard rate. The pension was seen as a reasonable response to the position of the self-employed who were in their late 50s when Class S contributions were introduced, and I believe most would agree that it represents good value for the contributions made .

It is worth noting that the most recently published Actuarial Review of the Social Insurance Fund found that the self-employed achieve very good value for money from the fund.

Where a person is unable to meet the qualifying conditions for a State pension (contributory), or is only eligible for a reduced rate of contributory pension, they may alternatively apply for State pension (non-contributory) amounting up to 95% of the maximum contributory pension rate which is subject to a means-test.

It is the case, therefore, that a person in receipt of this pension, in addition to having made very little contribution to the Social Insurance Fund (which funds contributory pensions), would have significant other means, as otherwise they would be expected to receive the State pension (non-contributory), at up to 95% the rate of the full contributory pension rate.

I hope this clarifies the matter for the Deputy.