Michael Ring (Mayo, Fine Gael)
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423. To ask the Minister for Employment Affairs and Social Protection when an anomaly (details supplied) will be resolved; and if she will make a statement on the matter. [48022/22]

Heather Humphreys (Cavan-Monaghan, Fine Gael)
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The Yearly Average method of calculating State Pension Contributory payment rates has been used since the introduction of the contributory Old Age Pension (now State Pension contributory) in 1961. Under the Yearly Average approach, anomalies can arise because of the date of entry into insurable employment. A late date of entry into insurable employment can result in an unusually low divisor, and consequently a higher yearly average than would be representative of the number of contributions

To this end, the National Pensions Framework (2010) proposed that the current ‘yearly average’ system, be replaced with a ‘Total Contributions Approach’ (TCA), which would make the level of pension directly proportionate to the number of social insurance contributions made by a person over his or her working life, with significant pension credits granted to people who have taken time out of the workplace to perform caring duties.

In January 2018, the Government announced an Interim TCA to calculate the entitlement of pensioners who reached state pension age on or after 1 September 2012 (i.e. those born on or after 1 September 1946) and who had a reduced rate pension entitlement based on post Budget 2012 rate bands. All pensioners who have reached state pension age since September 2012, therefore, have seen both Yearly Average and interim TCA methods applied and they receive whichever rate is most beneficial.

In September, I announced the Government's intention for a phased 10-year transition to the TCA method and the abolition of the Yearly Average approach for calculating individual State Pension (Contributory) entitlement, to commence from January 2024. 

The current model of Interim TCA method (also known as the Aggregated Contribution Method) will become the definitive TCA model, i.e., 40 years, or 2,080 contributions, required to qualify for a maximum State Pension (Contributory) payment rate.  The TCA model includes provision for 10 years of PRSI Credits and 20 years of HomeCaring periods, but with a cap of 20 years combined PRSI Credits and HomeCaring periods.  This facilitates a more equitable approach as pension outcomes are in line with the total number of contributions paid and credited, with significant provision for years of caring in the home.

I trust this clarifies the matter for the Deputy.