Robert Troy (Longford-Westmeath, Fianna Fail)
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605. To ask the Minister for Employment Affairs and Social Protection the number of persons on the State pension (contributory) who joined the scheme post 1 September 2012 with in excess of 2,080 contributions who are denied a maximum pension. [52770/21]

Robert Troy (Longford-Westmeath, Fianna Fail)
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606. To ask the Minister for Employment Affairs and Social Protection the number of persons on the State pension (contributory) who joined the scheme pre 1 September 2012 with in excess of 2,080 contributions who are denied a maximum pension. [52771/21]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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I propose to take Questions Nos. 605 and 606 together.

People who apply for the State Pension (Contributory) (SPC) after 1 September 2012 and who do not qualify for the maximum rate of pension under the Yearly Average approach can be assessed under the interim Total Contributions Approach, and can use the new Home Caring Periods Scheme to help them qualify for a higher rate of pension. This means that any such person with a PRSI record of 2,080 qualifying contributions or more at the time of award is entitled to the maximum rate of SPC.

For SPC recipients who were awarded SPC prior to 1 September 2012, pension rates were calculated using the Yearly Average approach only. Due to the nature of the calculation, certain people’s pensions will be below the maximum rate of SPC, despite a record of 2,080 contributions.

My Department’s records show that at least 1,818 people with a record of 2,080 contributions or more who retired prior to 1 September 2012 are in receipt of a pension below the maximum rate of SPC. However, detailed social insurance records are not readily available for some 14,000 pensioners who retired prior to 2006 and who are currently in receipt of a pension below the maximum rate. If these pensioners’ social insurance records are similar to those of people who retired between 2006 and 2012, then the overall number of people in this category would be significantly higher.

More broadly, there are over 100,000 people in receipt of SPC at below the maximum rate who retired prior to 1 September 2012. Any retrospective application of the interim Total Contributions Approach would have to be extended to this whole cohort, so that my Department would have to review the pension rate for each pensioner, as well as for Qualified Adult Allowance and other pension claims where there is an underlying entitlement to SPC.

Retrospectively reviewing the SPC entitlements of the 94,000 people who retired on or after 1^stSeptember 2012 and whose original SPC rate was below the maximum resulted in an average pension rate increase of €7.90 per week.

If the average uplift for SPC recipients who retired before 1^stSeptember 2012 is similar, this would imply additional annual expenditure of €46.5 million.

My Department’s Actuary estimates that the full cost of implementing such a policy change, including back-dating of increases to the date of retirement and increased payments in the future, would be over €1 billion. Even if the back-dating of increases were to be restricted to the years after 2012, the cost would be over €700 million.

The Deputy may also wish to note the following:

- Recipient figures were taken as at 31^stDecember 2020.

- A record is taken to mean the aggregate of paid contributions, credited contributions and Home Caring periods.

- Under the interim Total Contributions Approach introduced in 2018, caps of 520 credited contributions and 1,040 Home Caring periods apply, with a combined cap of 1,040 across both credited contributions and Home Caring periods.

- Home Caring periods (which include periods prior to 6 April 1994) are key to identifying those who would benefit from the interim Total Contributions Approach which was introduced in March 2018. However, the Home Caring period data captured in the Department’s systems are quite limited, as these data relate strictly to Homemaker’s Scheme applications (which only recognised caring periods after 6 April 1994).

- Those not achieving the maximum rate of SPC also include pensioners with “Mixed” insurance records and EU/Bilateral pensions.

Robert Troy (Longford-Westmeath, Fianna Fail)
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607. To ask the Minister for Employment Affairs and Social Protection further to Parliamentary Question No. 73 of 6 October 2021, if her attention has been drawn to the fact that this is not a justification for denying the application of the March 2018 changes to the scheme to all pensioners who have in excess of 2,080 contributions. [52772/21]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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The introduction of the interim Total Contributions Approach as announced in January 2018 was designed to address a situation where some pensioners were negatively affected by the changes announced to rate bands and payment rates in Budget 2012 and this specific purpose was made clear at the time.

People whose pensions were decided under the 2000-2012 ratebands (i.e., those born before 1 September 1946) were subject to a significantly more generous payment regime than those who qualified before or afterwards, as a Yearly Average of only 20 contributions per year (out of a maximum of 52) could attract a 98% pension.

If pre-2012 pensioners were also allowed avail of the interim Total Contributions Approach, their arrangements, as a group, would continue to be significantly more generous than those of post-2012 pensioners.

My Department’s Actuary estimates that the full cost of implementing such a policy change, including back-dating of increases to the date of retirement and increased payments in the future, would be over €1 billion. Even if the back-dating of increases were to be restricted to the years after 2012, the cost would be over €700 million.

I hope this clarifies the matter.