As I announced already, I am introducing a pro rata pension to address the specific issue of this group of self-employed people who having paid into the social insurance fund in good faith found themselves excluded from entitlement through no fault of their own.
The new pro rata pension will be payable to those self-employed persons who were aged 56 or over in April 1988 when social insurance was extended to the self-employed, and who have between five and ten years contributions paid since April 1988.
It is estimated that up to 10,000 people (8,000 pensioners and 2,000 qualified adults) will benefit from this measure at an estimated cost of £18 million in a full year. The total estimated cost of the measure in the future is over £170 million.
I will announce further details at budget time. Regarding the qualifying conditions for the pro rata old age (contributory) pension introduced in November 1997, these are designed to insure that people who pay social insurance for a reasonable period of time will qualify. A reduced yearly average of ten contributions qualifies a person for payment at 50 per cent of the maximum rate. The measure is aimed at people such as those quoted by the Deputy who “worked in and out of the social insurance system over their working lives”.
I consider these existing qualifying conditions to be reasonable and I do not have any plans to amend them along the lines proposed by the Deputy.