Bríd Smith (Dublin South Central, People Before Profit Alliance)
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598. To ask the Minister for Employment Affairs and Social Protection to set out the estimated number of persons due to retire in coming years that will be in receipt of a reduced contributory pension as a result of the new calculation method announced on 23 January 2018; and the estimated amount of the reduction in pension for those persons. [4212/18]

Regina Doherty (Meath East, Fine Gael)
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On the 23rd January, the Government agreed to a proposal that will allow pensioners affected by the 2012 changes in rate bands to have their pension entitlement calculated by a new “Total Contributions Approach” (TCA) which will include up to 20 years of a new HomeCaring credit. This approach is expected to significantly benefit many people, particularly women, whose work history includes an extended period of time outside the paid workplace, while raising families or in a caring role. It will make it easier for pensioners assessed under the yearly average model, to qualify for a higher rate of the State Pension (contributory). The TCA will ensure that the totality of a person’s social insurance contributions - as opposed to the timing of them - determines a final pension outcome.

The new TCA with substantial HomeCaring credits will be available to all people who reached pension age after 1st September 2012, when the revised rate bands took effect.

Under the new arrangements a person who has a 40 year record of paid and credited social insurance contributions, subject to a maximum of 20 years of the new HomeCaring credits, will qualify for a maximum contributory pension where they satisfy the other qualifying conditions for the scheme.

The new TCA for pensioners assessed under the 2012 rate band changes, comes into effect from the 30th March 2018. The Department will invite over 40,000 pensioners, currently assessed under the 2012 rate band changes, to have their pensions recalculated under TCA to determine if they qualify for a higher rate of entitlement. It is expected that approx. two thirds of these will have their payments increased.

It should be understood that no-one will have a reduced rate of payment as a result of this announcement. Anyone who is not better off as a result of this proposal will remain on their existing rate of payment.

The number of State pension recipients is increasing year on year. This has significant implications for the future costs of State pension provision, and demographic change alone is expected to increase spending on pensions by over €220 million this year, not including the impact of rate increases. In 2017 the total number of people with a State Pension Contributory in payment increased by 17,317, an increase of 4.6% over 2016. There were 36,690 new claims for State Pension Contributory in 2017, an increase of 4.5% on 2016.

The number of persons due to retire in coming years that will be in receipt of a reduced contributory pension as a result of the new calculation method announced on 23 January 2018 and the estimated amount of the reduction in pension for those persons cannot be estimated.

I hope this clarifies the matter for the Deputy.