Fiona O'Loughlin (Kildare South, Fianna Fail)
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70. To ask the Minister for Social Protection the progress that has been made on achieving equality in pension entitlements for those persons who have taken time out of their paid career to care for family members; and if he will make a statement on the matter. [2573/17]

Leo Varadkar (Dublin West, Fine Gael)
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There are a number of ways to qualify for a State pension 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. 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). 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. Payment rates are banded. For example, someone with a yearly average of 48 contributions will qualify for a full pension, whereas someone with a lower yearly average of 40 will qualify for a pension at the 98% rate.

The home-makers 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 from 1994, allows up to 20 years after that date 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. This has the effect of increasing the yearly average of the pensioner, which is used to set the rate of their pension, amounting up to 95% of the maximum contributory pension rate.

The Department is currently working on the development of a “Total Contributions Approach” (TCA) to replace the yearly average approach. The aim of this approach is to make the rate of contributory pension more closely match contributions made by a person with a view to making proposals for consideration later in the year. It is 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.

The Deputy should note that, on an actuarial basis, it is a fact that women generally get more back from their PRSI contributions than men. This is particularly true for women with lower earnings and shorter contribution years. The Actuarial Review of the Fund in 2012 confirmed that the Fund provides better value to female rather than male contributors. This is due to the redistributive nature of the Fund. The forthcoming Actuarial Review of the Social Insurance Fund will provide data that will allow officials to accurately cost and project various options available under the TCA reform.

I hope this clarifies the matter for the Deputy.