Dáil Éireann debate -
Thursday, 3 Nov 1994

Vol. 446 No. 7

Written Answers. - Farmers' Pension Entitlements.

Michael Creed

Question:

126 Mr. Creed asked the Minister for Social Welfare in relation to Farmers' RSI contributions where they do not have the required ten years paid to qualify for a retirement pension, if he will have arrangements made to pay a Pro-rata pension based on the number of years' contributions paid; if not, if he will allow farmers to buy their pension rights by paying the outstanding years' contributions to qualify for a pension; and, if not, if he will have arrangements made for a refund of these RSI contributions in view of the fact that they would have been of no practical benefit to the subscriber. [2933/94]

Minister for Social Welfare (Dr. Woods)

To qualify for the old age contributory pension, a person must have entered insurance at least ten years before pension age. This condition has been a feature of the scheme since it was introduced in 1961. The purpose of the condition is to link entitlement to the pension with a reasonable level of contributions to the Social Insurance Fund during the course of their career. This condition applies to self-employed persons in the same way as it applies to all insured people. Accordingly, self-employed people, including farmers, who became insured for the first time when social insurance was extended to the self employed in 1988 and who were then aged 56 or over would not qualify for the old age contributory pension. They are, of course covered for survivors' and orphans' pensions.

However self-employed people in that age group who had been insured as employed contributors for any period prior to age 56 could qualify for the old age contributory pension. Such insurance can be combined with insurance as a self-employed contributor for old age pension purposes.

Refunds of the old age pension element of the contribution may be made to those who entered insurance less than ten years before pension age or who fail to qualify for either old age contributory or non-contributory pension.

Detailed consideration has been given by my Department to the possibility of providing for entitlement to the old age contributory pension to persons who entered insurance for the first time as self employed contributors less than ten years before pension age. In this regard costings made in 1989 estimated that the net cost of paying old age contributory pensions to all self-employed contributors, including farmers, who were aged between 56 and 66 in April 1988 would amount to £756 million over the lifetime of the persons concerned. The extra rate of contribution which would need to be paid by self-employed contributors generally to finance such an extension would be 2.4 per cent over a 50 year period. Allowing self-employed persons to buy pension rights by paying the outstanding years contributions in order to qualify for an old age contributory pension would also be very costly unless the payments made by the individual self-employed contributors were calculated on an actuarial basis. The cost to an individual contributor buying rights on this basis would be prohibitive.

The National Pensions Board in its final report "Developing the National Pension System" puts forward,inter alia, a number of recommendations relating to eligibility for old age pensions. The report and its recommendations are being studied within my Department at present and I intend, in due course, to bring forward proposals on the issues addressed in the report.