Fergus O'Dowd (Louth, Fine Gael)
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211. To ask the Minister for Employment Affairs and Social Protection her views on queries raised by a person (details attached) about pension entitlements; and if she will make a statement on the matter. [39932/17]

Regina Doherty (Meath East, Fine Gael)
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Expenditure on pensions, at approximately €7.3 billion, is the largest block of expenditure in my Department. Demographic change alone will increase this by over €220 million this year.

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. This practice was abolished in 1973 when Ireland joined the EEC. As employees in the public service generally paid a reduced rate of PRSI, which provided no cover for the State pension (contributory), the marriage bar would not generally have reduced State pension entitlement, as such pensioners would not have qualified for that payment in the first place had they remained in public sector employment, and instead would have qualified for a Public Service pension. Any questions regarding that issue should be referred to the Minister for Public Expenditure and Reform.

The homemaker’s scheme, which was introduced in 1994 and provides for periods since then, makes qualification easier for those who take time out of the workforce for caring duties. It does this by allowing 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. It is estimated that extending the period covered by this scheme to periods prior to its introduction would cost some €290 million per year.

Where people do not qualify for a maximum-rate contributory pension in their own right, the social protection system provides alternative methods of supporting such pensioners in old age. Where 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, which by default is paid directly to them, and is subject to a personal means-test. Alternatively, they may qualify for a State Pension (non-contributory), based on their household means, amounting up to 95% of the maximum contributory pension rate. There are very significant income and capital disregards in the means tests for these payments, which result in the large majority of payees – most of whom are women – being paid at the maximum rate.

It should be noted the most recent CSO figures (from 2015) show that the rate of Consistent Poverty among women aged over 65 is 2.6%, compared to 2.9% for men in the same age group. Both of these figures (which are so close as to effectively be at parity) are very substantially lower than the rates of consistent poverty among the working age population, and attest to the role of the state pension system in keeping older people out of Consistent Poverty, and its success in doing so for men and women equally.

The gap between average State pension payments to men and women over 66 made by my Department is 2% (to the benefit of men), an average difference of some €4 a week, and this reflects the different dynamics of 4 payments – 3 of which benefit women more than men, and one (the State pension contributory) which benefits men more than women. Changing patterns in working lives over the decades are expected to continue to see the outcomes for male and female retirees converge over time.

I understand that the gender pension gap referred to in the material provided by the Deputy relates to an EU Commission statistic, used to calculate the difference in all pension income, including occupational pensions and personal investment pensions. While I understand this figure was approximately 37% in 2012, I am informed that when the Commission most recently calculated this figure for Ireland (earlier this year, in respect of 2014), the figure was 32.0%, compared to 39.1% across the EU. While the Irish figure is higher than I would like, and reflective of higher occupational and private pensions among male pensioners than among their wives who would have spent years out of the workforce in the family home, raising their children, it is notable that the gap is higher in many other, larger EU countries such as Germany, the UK, France and the Netherlands, where female labour market participation was higher than here during the decades that our current pensioners worked, and I would hope that the increased female participation in the workforce in recent decades will continue to close this gap as much as is possible.

The National Pensions Framework (2010) announced that the Yearly Average system for calculating SPC entitlements will be replaced with a Total Contributions Approach. The Framework noted that had this reform been introduced at that time, it would have disadvantaged certain pensioners who would have difficulty acquiring sufficient contributions to qualify for a full pension at that time. This includes farmers and other self-employed people, who have only had coverage since 1988, and so the Framework proposed 2020 as the start date. Bringing the date forward to 2018, even if administratively feasible, would not be to the advantage of farmers, who generally qualify for a full rate of pension if they have been either paying Class S contributions for each year since 1988.

The position of homemakers is being carefully considered in developing this new system of calculating the State Pension (contributory). This is a very significant reform with considerable legal, administrative, and technical elements in its implementation. Following completion of the Actuarial Review of the Social Insurance Fund this year, my Department will conduct a period of consultation with relevant stakeholders. Following the consultation period, I will submit a proposal to Government seeking approval for the new approach, and subsequently introduce legislation to give effect to the model decided upon.

I hope this clarifies the matter for the Deputy.