Robert Troy (Longford-Westmeath, Fianna Fail)
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578. To ask the Minister for Social Protection his plans to amend the qualifying contributions which are necessary to avail of the contributory pension; when these will be implemented; and if he will make a statement on the matter. [41675/16]

Leo Varadkar (Dublin West, Fine Gael)
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The rate of payment under the State pension (contributory) scheme is related to contributions paid over the years into the Social Insurance Fund, and credited contributions where applicable. As such, those with a stronger attachment to the workforce, who have paid more into that fund, are more likely to be paid at a higher rate under that scheme than those with more intermittent contributions made during their working life.

There are a number of criteria which must be satisfied in order to qualify for a State pension contributory, whether at full or reduced level. 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. Provided a person satisfies all the relevant conditions, they may qualify for a State pension contributory, the minimum personal rate of which is €93.20, and the maximum personal rate of which is €233.30.

Since the contributory pension was introduced in 1961, 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).

The National Pensions Framework (2010) proposed that a “Total Contribution Approach” (TCA) should replace the yearly average approach 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. Officials of my Department are currently working on the detailed development of the TCA. It is planned that, following receipt and analysis of data from the forthcoming independent Actuarial Review of the Social Insurance Fund, a consultation process will be conducted in the middle of this year, and following this, proposals on the final details of the scheme will be made by the Government to the Oireachtas before the end of the year.

It’s worth noting that this is a very significant reform with considerable legal, administrative, and technical elements in its implementation. An important element in the final design of the scheme will be the position of people who have gaps in their contribution records for various reasons, and this factor is being considered very carefully in developing this reform.

I hope this clarifies the matter for the Deputy.