Bernard Durkan (Kildare North, Fine Gael)
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182. To ask the Minister for Social Protection if gaps in a person's contribution record in the assessment of entitlement to contributory old age pension, which now may entitle them to a lower level of payment, notwithstanding the fact that they were in insurable employment during a multiplicity of employment of up to five years and in which previously his Department's policy was, that they receive credit for such voids in their payment record on the grounds that contributions should have been returned on their behalf; if this policy has been discontinued; and if he will make a statement on the matter. [26252/17]

Leo Varadkar (Dublin West, Fine Gael)
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Expenditure on pensions, at approximately €7.3 billion, is the largest block of expenditure in my Department, representing some 37% of its expenditure. Demographic change alone will increase this by over €220 million this year. Maintaining the rate of the State pension is critical to protecting older people from poverty.

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.

At the moment, to qualify for the State pension (contributory) a person must have at least 520 paid contributions and satisfy a yearly average test (a yearly average of 48 contributions paid and/or credited is required for a maximum rate pension). The yearly average test has been in existence since 1961 when contributory pensions were first introduced. The scheme was designed with a view to ensuring that people could qualify for contributory pensions immediately and to suit a system where social insurance coverage was limited.

The primary purpose of credits is to secure social welfare entitlement of employees by covering gaps in insurance where they are not in a position to pay PRSI such as during periods of unemployment or illness. Credits do not, on their own, give an individual entitlement to social insurance benefits. However, they may assist insured workers to qualify for them.

If someone believes that their PRSI record is inaccurate and does not have a record of certain contributions which were deducted from their pay, they should contact my Department with evidence, and this will be investigated.

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.

It is planned to replace the yearly average approach with a Total Contributions Approach (TCA) 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 with a view to making proposals for consideration later in the year. 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.