Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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726. To ask the Minister for Employment Affairs and Social Protection her plans to reform the pension system which currently discriminates against persons, mainly women, that took time out of the workforce prior to 1994 to care for children or elderly relatives; and if she will make a statement on the matter. [39811/17]

Bernard Durkan (Kildare North, Fine Gael)
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736. To ask the Minister for Employment Affairs and Social Protection the extent to which she expects to be in a position to address the issues in the context of State pension provisions and the requirements of women that find themselves with insufficient contributions to qualify due to taking time off from the workforce while rearing their children; and if she will make a statement on the matter. [39885/17]

Martin Heydon (Kildare South, Fine Gael)
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743. To ask the Minister for Employment Affairs and Social Protection her plans to review the calculation basis for the contributory old age pension in view of the impact the averaging system is having on many women in particular that for different reasons took breaks from work and are now receiving lower pensions; and if she will make a statement on the matter. [39895/17]

Regina Doherty (Meath East, Fine Gael)
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I propose to take Questions Nos. 726, 736 and 743 together.

The State pension is a valuable benefit and is the bedrock of the pension system. There are two State pensions related to State pension age. 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.

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.

The Actuarial Review of the Social Insurance Fund in 2012 confirmed that the Fund provides better value to female rather than male contributors. This is due to the redistributive nature of the Fund. The average pension payments made by my Department to men and women over 66 years of age are within approximately 2% of each other.

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 State Pension (contributory).

It is hoped that this approach to pension qualification will replace the current one from 2020. Following completion of the actuarial review of the Social Insurance Fund 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, and then proceed to introduce legislation to give effect to this reform.

I hope this clarifies the matter for the Deputies.