Written answers

Thursday, 6 December 2018

Department of Employment Affairs and Social Protection

State Pension (Contributory) Eligibility

Photo of Bríd SmithBríd Smith (Dublin South Central, People Before Profit Alliance)
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256. To ask the Minister for Employment Affairs and Social Protection if the case of a person (details supplied) will be examined; the reason her Department does not inform persons in the years prior to their retirement age that they may fail to qualify for the pension without additional contributions paid or voluntary; if such advanced warning will be provided in the future; the reason credited contributions and discounted years in the homemakers scheme do not count towards or are credited when calculating the minimum 520 contributions; and her plans to allow applicants use credited contributions or receive some credits for homemaker years in future changes to the contributory scheme. [51253/18]

Photo of Regina DohertyRegina Doherty (Meath East, Fine Gael)
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The social insurance record of the person concerned is currently under review and my Department’s Central Records Section will contact the person directly with the outcome of that review when complete.

State pension entitlements, contributory and no-contributory, are assessed on the basis of the eligibility conditions applicable on the date an applicant reaches pension age. For that reason is it not possible to predict future state pension entitlements, or comment on individual pension planning enquiries, as the qualifying conditions at the time a person reaches pension age may be different. That said, it is likely that state pension (contributory) entitlement will continue to directly relate to the nature and extent of a person’s social insurance record.

The Department’s website www.welfare.ie provides a comprehensive suite of information in relation to current state pension entitlements, including a range of frequently asked questions. Information is also available from my Department's offices and from Citizens Information Services.

It is advisable that all contributors maintain their social insurance record as fully as possible over their working life. It is open to contributors to request a copy of their social insurance record from the Department at any time. In addition to seeking the record through normal postal means, a person can also access their social insurance record in real time online where they have a verified MyGovID account. Information on getting a verified MyGovID account is available on www.mygovid.ie.

In April 2012, the number of paid contributions required to qualify for a state pension (contributory) increased from 260 to 520. While this change only took effect in 2012, it was signalled well in advance. In 1993, "Developing the National Pension System - Final Report of the National Pensions Board” was published, and recommended that the number of paid contributions required to qualify for a contributory pension should be increased to 520 contributions, in recognition of the expansion of PRSI coverage over the decades. The necessary legislation to effect this recommendation was contained in Section 12 of the Social Welfare Act 1997, which provided for the implementation of the change in two stages, with the paid contribution requirement being standardised at 260 from 2002 (5 years after its introduction in law), and rising to 520 from April 2012 (15 years after its introduction in law). There are no plans to remove this minimum requirement of 520 paid contributions for pension qualification purposes. It is reasonable to require people who claim a contributory pension to have made at least 10 years paid contributions into the Social Insurance Fund which finances that pension, over 50 years of working age life. Having 520 paid contributions alone does not qualify a person for maximum rate pension. The current homemakers (disregard) scheme and (various) credited contributions can assist applicants achieve a higher rate of payment, but cannot be used to meet the qualifying conditions for state pension (contributory).

Those who do not satisfy the qualifying conditions for contributory pension, because they have paid few or no contributions into the Social Insurance Fund, may instead qualify for State Pension (non-contributory). This is a means-tested payment (based on their share of household means), with the maximum payment set at 95% of the state pension (contributory) rate.

The Government plans to put in place a new Total Contributions Approach for all new pensioners from 2020. Under a “Total Contributions Approach”, a set total of social insurance contributions paid and credited will be required to qualify for a maximum rate state pension (contributory) and people with less than this set total will receive a pro-rata entitlement. This approach was subject to a recent public consultation. The analysis of that consultation is almost finalised and when complete, will help inform a proposal to go to Government on the future total contributions approach for new pensioners from 2020.

An interim total contributions approach for post-September 2012 pensioners on reduced contributory pensions is provided for in the Social Welfare, Pension and Civil Registrations Bill 2018. This provides an opportunity for some of these pensioners to improve their current rate of payment under a new calculation method and allows for up to 20 years of HomeCaring Periods. On enactment, over 79,000 existing pensioners, born on or after 1 September 1946, will be reviewed under the new arrangements. This work is expected to commence in January 2019.

I hope this clarifies the matter for the Deputy.


Monica Condron
Posted on 9 Dec 2018 12:31 pm (Report this comment)

While the minister is correct that the changes to the minimum number of contributions from 260 to 520 was signalled well in advance the change to the pension rate bands was not. I was aware of the total contributions system being introduced in 2020 but never once considered that an Irish Government would decide to reduce pensions by stealth through changes to the pension rate bands without prior notice in 2012. That is not reasonable for any pension scheme. I will probably gain about €6 from the new Total Contributions Approach for post 2012 pensioners but will still be at a loss of €13 and will also continue to get reduced pension increases. Not everyone is happy that the review of pensions under the TCA will amend the problems created by Budget 2012 pension changes. I think there are many women out there who have no idea how to calculate what they will gain from the pension review and will be bitterly disappointed when they finally find out that we were hoodwinked by the pension fix announced in January 2018.

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