Vol. 449 No. 1
6 Miss M. Wallace asked the Minister for Social Welfare the number of self-employed people short of contributions to qualify for the contributory pension which commenced in 1985 and who will reach pension age before having the necessary ten years of contributions. [3315/95]
36 Miss M. Wallace asked the Minister for Social Welfare if his attention has been drawn to an anomaly in his Department's regulations which require modification in that a self-employed person who commenced paying PRSI in 1988 but was over the age of 56 should be entitled to a refund of 53 per cent of his contributions whereas these are being withheld by his Department because the same applicant paid social insurance stamp contributions for two years in the 1950s and is therefore not entitled to a refund on the same basis as other self-employed contributors who came into the scheme in 1988 and who were over the age for qualifying for a pension; his views on whether self-employed contributors who came into the scheme in 1988 should be either entitled to payment of a pension or a refund; his further views on whether it is acceptable for his Department to refrain from either paying a pension or a refund of the contributions; the steps, if any, he will take to ensure a review of the regulations in order to modify these anomalies. [3212/95]
37 Miss M. Wallace asked the Minister for Social Welfare the number of self-employed people short of contributions to qualify for the contributory pension which commenced in 1985 and who will reach pension age before having the necessary ten years of contributions.[3207/95]
172 Miss M. Wallace asked the Minister for Social Welfare if his attention has been drawn to an anomaly within his Department's regulations which require immediate modification where a self-employed person who commenced paying PRSI in 1988 but was over the age of 56 should be entitled to a refund of 53 per cent of his contributions, but that these refunds are being withheld in his Department in view of an anomaly where the same applicant paid social insurance stamped contributions for two years in the 1950's and in view of paying these extra two years he is not entitled to a refund on the same basis as other self-employed contributors who came into the scheme in 1988 and who are over the age of qualifying for a pension; his views on whether self-employed persons who came into the scheme in 1988 should be either entitled to payment of a pension or a refund and it is unacceptable for his Department to refrain from either paying a pension or a refund of the contributions; and the steps, if any, he proposes to take to ensure that a review takes place of the regulations in order to modify these anomalies. [3551/95]
I propose to take Questions Nos. 6, 36, 37 and 172 together.
Precise figures are difficult to calculate in this area but it is estimated that up to 50,000 self-employed people may fail to qualify for an old age contributory pension because they were over 56 in 1988 when PRSI for the self-employed was introduced. Some of these people, however, are likely to qualify for an old age non-contributory pension which is payable subject to a means test.
To qualify for an old age contributory pension, a person must have, inter alia, 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.
All persons who enter social insurance after age 56 are entitled to a refund of the old age pension part of their contributions provided that they do not qualify for an old age contributory or a non-contributory pension. Accordingly, self-employed people 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, and are entitled to a partial refund of contributions.
Self-employed people in that age group, who had been insured as employed contributors for any period prior to age 56 could, depending on their total contribution record, qualify for the old age contributory pension as such insurance can be combined with insurance as a self-employed contributor for old age pension entitlement purposes.As these people first entered the social insurance system prior to age 56 they are not entitled to a refund of contributions in the event of failing to qualify for a pension.
The regulations dealing with refunds is under review within my Department and the issue raised by the Deputy will be considered in the context of this review.
I am glad the Minister is taking Question No. 36 with Question No.6. His reply is contradictory; in the earlier part he states that all those who fail to qualify for a pension will be entitled to a refund. He also made this point in reply to Question No.227 on 24 January in which he stated that refund of the old age pension element of the contribution may be made to those who entered insurance less than ten years before pension age and failed to qualify. As can be seen, this is not the case. Some of those who entered the self-employed pension scheme after 1988 paid contributions for two years in the 1950s and because of this they are debarred from receiving a refund or a pension. This is an anomaly in this system and I ask the Minister to give a commitment that he will ensure it is changed.
As the Minister rightly pointed out, the old age pension scheme was introduced in 1961, 27 years before the self-employed were allowed to contribute. During that period they did not have the option of making contributions despite the fact that they were working. It seems unreasonable that the Department would debar them from paying contributions. At the very least they should be entitled to a pro rata pension. It seems that they are being badly treated by the Department. I would like to hear the Minister's comments.
My reply is not contradictory; if the Deputy reads it closely she will find that those who cannot qualify for a refund paid contributions before they reached the age of 56. These contributions are taken into account along with the contributions paid after they reached the age of 56 for pension purposes. Only those who started to pay contributions under the 1988 scheme after they reached the age of 56 and had no previous contributions can claim if for instance they do not qualify for a non-contributory pension. I acknowledge that this area is extremely complex. New pension entitlements have been introduced. In order to try to balance the costs to the Social Insurance Fund and because of the need to receive an adequate contribution from those who will eventually qualify for a pension certain regulations had to be introduced.I am in the process of having these regulations and contribution conditions reviewed so that we can eliminate as many anomalies as possible.
As the self-employed were not allowed to contribute during the 27 year period, 1961-1988, the least they should be entitled to is a pro rata pension. It is not their fault that they were not allowed to contribute.It is unfair that the ten year rule applies in their case.
I will certainly arrange to have the Department examine that aspect of it. Recommendations from the Pensions Board on this whole area are currently being examined also. Trying to regularise people's entitlements to pensions is a major task. In the next decade we face a fairly rapid expansion of the numbers of people on pensions and whatever we put in place now must be consistent with ensuring that people in old age have an adequate income and that we can actually afford to pay the income we are promising.
