Written answers

Tuesday, 20 June 2017

Department of Social Protection

State Pension (Contributory)

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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2070. To ask the Minister for Social Protection if she will address a matter (details supplied); and if she will make a statement on the matter. [28480/17]

Photo of Regina DohertyRegina Doherty (Meath East, Fine Gael)
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The State pension (contributory) is one of the State pension schemes, and its rate of payment is related to PRSI contributions made over years into the Social Insurance Fund. As such, those who have paid more into the fund are most likely to be paid under that scheme. There are a number of criteria which must be satisfied to qualify for a State pension contributory. These include that the person be aged 66 or over, and that they have at least 520 paid contributions, i.e., a minimum of 10 years.

Social insurance contributions (Class S PRSI) were introduced for self-employed people on 6th April 1988. These contributions provide cover for self-employed people for long-term benefits such as State pension (contributory) and widows/widowers pension (contributory).

There was also a State pension (contributory) half-rate pension introduced for certain self-employed people which is still paid to some older pensioners, although it does not apply to new pensioners. The legislation providing for this pension came into effect from the 9th of April 1999, to provide a half-rate pension for groups who would not otherwise qualify for a contributory social welfare pension, and who did not satisfy the means test for the State pension (non-contributory). The measure was designed to benefit self-employed people who were already over 56 years of age when compulsory self-employed social insurance was introduced in 1988, who had not paid other contributions (such as voluntary contributions, or other contributions while in employment), and who could not therefore satisfy the condition of having entered social insurance 10 years before pension age. The pension requires a minimum of only 5 years contributions, and is payable at 50% of the standard rate. The pension was seen as a reasonable response to the position of the self-employed who were in their late 50s when Class S contributions were introduced, and relative to other pensions funded by the Social Insurance Fund, it represents very good value for the contributions made .

It is worth noting that the most recently published Actuarial Review of the Social Insurance Fund found that the self-employed achieve very good value for money from the fund.

Where a person is unable to meet the qualifying conditions for a full rate State pension (contributory), they may alternatively apply for State pension (non-contributory) which is subject to a means-test, and which is paid at up to 95% of the maximum contributory pension rate. That rate of payment does not include rent allowance, household benefits or fuel allowance, which would be additional payments where applicable.

It is the case, therefore, that a person in receipt of the half-rate self employed pension, in addition to having paid relatively little into the Social Insurance Fund (which funds contributory pensions), have significant additional means (such as a private pension), as otherwise they would be expected to receive the State pension (non-contributory) instead.

I hope this clarifies the matter for the Deputy.

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