Brendan Griffin (Kerry, Fine Gael)
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375. To ask the Minister for Social Protection his plans to extend the homemakers credits scheme prior to 1994; and if he will make a statement on the matter. [16627/17]

Leo Varadkar (Dublin West, Fine Gael)
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The State pension is a very valuable benefit and is the bedrock of the Irish pension system. There are two State pensions. Firstly, the State pension (non-contributory) is a means tested pension and is funded by general taxation. Secondly, the State pension (contributory) is not means tested and is paid from the Social Insurance Fund.

Therefore, it is important to ensure that those qualifying for a contributory pension 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 (contributory), 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.

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 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. This has the effect of increasing the yearly average of the pensioner, which is used to set the rate of their pension.

My Department has estimated that the annual cost of extending the Homemakers scheme to allow people to avail of the full 20 years currently allowed under the scheme, encompassing periods prior to 1994, could cost some €290m in 2017, and this figure would rise at a faster rate than the rate of the overall cost of State pensions. This is a very significant cost, and the main beneficiaries would be people who already have significant household means, and who do not therefore qualify for a means-tested payment.

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. Alternatively, they may qualify for a State pension (non-contributory), which amounts up to 95% of the maximum contributory rate. While this payment is subject to a household means-test, there are very significant disregards which mean that over 70% of such pensioners qualify at the full rate.

I hope this clarifies the matter for the Deputy.