Robert Troy (Longford-Westmeath, Fianna Fail)
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613. To ask the Minister for Employment Affairs and Social Protection the reason credits earned after 65 years of age in the case in which a person is signing on could not be counted towards the pension at 66 years of age. [3373/18]

Regina Doherty (Meath East, Fine Gael)
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State pension (contributory) entitlement is calculated by the ‘yearly average’ system, where the total number of contributions paid or credited is divided by the number of years of the person’s insurance record. The maximum rate of pension is payable where a person has a yearly average of at least 48, and there are banded entitlements below that.

In calculating the yearly average, the number of full-rate contributions paid and/or credited is counted up to the end of the last full tax/contribution year before reaching pension age (66), and this total is divided by the number of tax/contribution years in their record up to that point. For example, if someone’s record was from 1972, and they turned 66 on 1 July 2016, it would be the contributions they paid or were credited in the period to 31 December 2015, divided by 44 years (i.e. every year from 1972 to 2015). Taking the subsequent period into account to calculate the yearly average could only increase their contributions by a maximum of 26 contributions, and if their yearly average was already higher than that, this would have the effect of reducing their yearly average, rather than increasing it, as the amended total would be divided by 45. Given the fact that in most cases, this would result in a lower rather than a higher yearly average, it is to most people’s advantage that the rule should apply as it does now.

However, the Deputy should note that contributions can still be used to satisfy other pension conditions (notably the requirement to have a minimum of 520 contributions paid to qualify for State pension contributory).

It should also be remembered that PRSI does not just fund the State pension contributory and enable people to qualify for that payment, but also working age benefits before they retire.

I do hope this clarifies the matter for the Deputy.