Willie O'Dea (Limerick City, Fianna Fail)
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44. To ask the Minister for Employment Affairs and Social Protection her plans to reform the pension system; her further plans to address the anomaly in the calculation of the contributory pension whereby those that took time out of the workforce for caring duties are being denied a full State pension; and if she will make a statement on the matter. [39442/17]

Regina Doherty (Meath East, Fine Gael)
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The State pension contributory is one of a number of pensions the State pays to people over 66. The rate of payment to a person is related to the number of contributions made into the Social Insurance Fund by that person. Entitlement levels are calculated by means of a ‘yearly average’ calculation, where the total contributions paid or credited are divided by the number of years of the working life. Payment rates are banded. For example, someone with a yearly average of 48 contributions will qualify for a full pension, whereas someone with a yearly average of 20 will qualify for a pension at 85% of the full rate. The homemaker’s scheme makes qualification for State pension (contributory) easier for those who take time out of the workforce for caring duties.

The scheme, which was introduced in 1994 and is effective for periods from then, allows gaps of up to 20 years spent caring for children under 12 years of age or incapacitated people to be disregarded when a person’s social insurance record is being averaged for pension purposes.

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 to up to 90% of a full rate pension, which by default is paid directly to them. Alternatively, they may qualify for a means-tested State Pension (non-contributory), which amounts to up to 95% of the maximum contributory rate.

It is planned that a total contributions approach will replace the yearly average approach from around 2020, and the position of homemakers will be carefully considered in the context of that reform.