Dáil Éireann debate -
Wednesday, 4 Feb 1998

Vol. 486 No. 4

Written Answers. - Social Welfare Pensions.

P. J. Sheehan

Question:

41 Mr. Sheehan asked the Minister for Social, Community and Family Affairs if self-employed people will be given the opportunity of paying any yearly contributions that fell short of the ten year mandatory period that would qualify them for the contributory pension, particularly farmers who entered the self-employed insurance contribution scheme when it was first introduced in 1988 by the Department of Social Welfare and who had attained the age of 56 years prior to the introduction of that scheme in 1988. [2713/98]

Willie Penrose

Question:

50 Mr. Penrose asked the Minister for Social, Community and Family Affairs the plans, if any, he has to amend the PRSI scheme for self employed people to allow them a pro-rata pension for the contributions paid or to buy the necessary contributions to allow them to qualify for a pension. [2684/98]

Minister for Social, Community and Family Affairs (Mr. D. Ahern)

I propose to take Questions Nos. 41 and 50 together.

The issues raised by the Deputies refer 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.

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 1997 Social Welfare Act 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 an employee, to receive a refund of the pensions element of their self-employed social insurance, provided that 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 newpro-rata pensions were introduced so that people who pay social insurance for a reasonable period of time 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.

Allowing self-employed persons to buy pension rights by paying the outstanding years contributions or becoming voluntary contributors after age 66 in order to qualify for an old age (contributory) pension would be very costly to the Exchequer unless the payments made by the individual self employed contributors were calculated on an actuarial basis. The cost to an individual contributor of buying rights on this basis would be prohibitive.

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, of course, qualify for an old age (non-contributory) pension which is payable subject to a means test.