The issue raised by the Deputy refers to the position of self-employed people who were over age 56 on the extension of social insurance to the self-employed in April 1988. The figures the Deputy seeks are not readily available but it is estimated there could have been up to 20,000 self-employed people over age 56 when PRSI was extended in 1988.
To qualify for the old age contributory pension a person must, inter alia, have entered insurance at least ten years before pension age. This condition has been a feature of the scheme since its introduction in 1961. The purpose of the condition is to link entitlement to a pension with a reasonable level of contributions to the social insurance fund during the course of a person's career. This condition applies to all insured people.
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. They may be covered for widow's, widower's and orphan's pensions subject, of course, to satisfying the normal qualifying criteria. 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 as such insurance can be combined with insurance as a self-employed contributor for old age pension purposes.
Refunds of the old age contributory pension element of the contribution may be made to those who entered insurance for the first time less than ten years before pension age and who fail to qualify for either an old age contributory or non-contributory pension. In the Social Welfare Act, 1997, provision was made for self-employed contributors, who entered insurance in 1988 but were already over the age of 56 at that time and who had previously paid social insurance contributions as employees, to receive a refund of the pensions element of their self-employed social insurance provided they do not qualify for an old age contributory or non-contributory pension. Heretofore, their earlier contributions precluded them from receiving such a refund.
From 21 November last new pro rata pensions were introduced so that people who pay social insurance for a reasonable period will qualify for an old age contributory pension. A yearly average of between 15 and 19 contributions gives a pension of 75 per cent of the maximum rate, while an average of between ten and 14 gives a pension of 50 per cent of the maximum rate. To qualify a person also needs to have a minimum of 260 paid contributions. This measure will be of benefit to many self-employed contributors.
I will continue to ensure the broadest possible contributory pension cover to as many categories as possible. I have asked my Department to examine the general issue relating to the self-employed group aged over 56 in April 1988. As any proposals would have a major cost implication they would fall to be considered in a budgetary context.
Any person resident in the State can qualify for an old age non-contributory pension which is payable subject to a means test.