Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

145. To ask the Minister for Social Protection the cost of changing the averaging system for the calculation of the State contributory pension back to the system that was in place prior to the changes introduced in 2012; and if he will make a statement on the matter. [22289/17]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As provided for in Budget 2012, from September 2012, new rate bands for State pension (contributory) were introduced. This resulted in one of the bands (in respect of those with a yearly average of 20-47 contributions) being replaced with three bands (in respect of yearly averages of 40-47, 30-39, and 20-29 respectively). These additional bands more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life are likely to benefit more in retirement than those with lesser contributions.

It is estimated that the cost of reverting to the rate-bands which existed between 2000 and 2012 would be over €60 million in 2018, if introduced from January 2018, and that this annual cost would rise at a rate of some €10 million each year.

I hope this clarifies the matter for the Deputy.

Willie O'Dea (Limerick City, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

146. To ask the Minister for Social Protection the cost of changing the calculation system for contributory pensions by halving the threshold to qualify for a pension from 520 contributions, which it is as present, to 260 contributions; and if he will make a statement on the matter. [22290/17]

Leo Varadkar (Dublin West, Fine Gael)
Link to this: Individually | In context | Oireachtas source

A number of significant reforms to State pensions were introduced in recent years which have allowed my Department maintain the value of the State pension, and indeed increase it in the last two Budgets. With effect from April 2012, the number of paid contributions required to qualify for a State Pension increased from 260 paid contributions to 520 paid contributions. At the time this measure was introduced, the annual Exchequer savings were expected to be in the region of €6m per annum but rising substantially on a cumulative basis in the long term. Therefore, the true figure now would be significantly higher. However, as people with 260-519 paid contributions no longer make claims to SPC, the data is not available to update this costing.

Officials of my Department are currently working on the detailed development of the Total Contributions Approach (TCA) with a view to making proposals for consideration later in the year. This is a very significant reform with considerable legal, administrative, and technical elements in its implementation.

I hope this clarifies the matter for the Deputy.