Wednesday, 12 July 2017
Department of Social Protection
State Pension (Contributory) Eligibility
440. To ask the Minister for Social Protection the extent to which progress has been made in addressing the issue whereby women are deprived of contributory pensions, having retired from the workplace while raising their families or due to the marriage ban, and who have made a major contribution to society in the course of their working lives; if their cases will be re-examined with a view to crediting them with sufficient contributions to enable them to qualify for State or retirement pension; and if she will make a statement on the matter. [33502/17]
The State pension is a valuable benefit and is the bedrock of the pension system. There are two State pensions. The State pension (non-contributory) is a means-tested pension funded from taxation, whereas the State pension (contributory), is not means-tested and is paid from the Social Insurance Fund. Accordingly, it is important to ensure those qualifying for the latter 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 homemaker's 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 his or her pension.
The marriage bar describes a rule that existed in most of the public service, and some private sector employments, where women were required to leave their employment upon marriage. The practice was abolished in 1973 when Ireland joined the EEC. As it was a rule rather than law, women who were required to leave their employment upon marriage were entitled to take up alternative employment in the private sector, and many did.
It is worth remembering that public servants affected by the marriage bar had paid a reduced PRSI, with no State pension (contributory) coverage. Accordingly, their continued employment in the public service would never have created an entitlement to the State pension (contributory). Instead, by impacting upon their continuing public service employment, the marriage bar’s pension implications, where they exist, more generally relate to their eventual entitlement to a public service pension. Any questions regarding this issue are a matter for the Minister for Public Expenditure and Reform.
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 means-tested State pension non-contributory, which amounts up to 95% of the maximum contributory rate.
Work is under way to replace the yearly average system with a total-contributions approach. Under this approach, the rate of pension paid will more closely reflect the total number of contributions made by people, not when they paid them. The position of homemakers is being carefully considered in developing this new system of calculating the contributory State pension.
It is expected that this approach to pension qualification will replace the current one from 2020. Following completion of the actuarial review of the Social Insurance Fund later this year, a refined proposal will be developed. My Department will conduct a period of consultation with relevant stakeholders, including interest groups, representative bodies and the Oireachtas. Following the consultation period, I will submit a proposal to Government seeking approval for the new approach.