Dáil Éireann debate -
Wednesday, 21 Apr 1999

Vol. 503 No. 4

Written Answers. - Pension Provisions.

Ruairí Quinn

Question:

164 Mr. Quinn asked the Minister for Social, Community and Family Affairs the contribution conditions, with particular reference to pre-1953 contributions, for each social welfare pension; the rational behind these conditions; the changes made to the conditions in recent years and the rational for those changes; the plans, if any, he has to change the current conditions; and if he will make a statement on the matter. [10548/99]

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

To qualify for old age (contributory) or retirement pension, a person must have entered insurance at least ten years before pension age; have at least 156 contributions paid (from April 2002, this will increase to a minimum of 260 paid contributions and to a minimum of 520 from April 2012), and have a yearly average of at least 20 contributions (or 24 in the case of a retirement pension) registered since January 1953 (when the unified system of social insurance came into effect), or the time they commenced insurable employment, if later.

In November 1997 this minimum yearly average requirement was reduced from 20 to ten contributions per year, leading to a pro-rata pension. Where a person has a yearly average of between ten to 14 contributions, they are entitled to a pension rate at 50 per cent of the standard maximum rate while those with averages of between 15 to 19 receive a pension rate equivalent to 75 per cent of the standard maximum rate.

In recognition of their special circumstances, the qualifying conditions for the widow(er)'s (contributory) pension are more flexible than those outlined above.

Prior to 1953, three different types of contributions were payable – national health insurance, widow's and orphan's pension and unemployment insurance contributions – which gave specific entitlement only to the benefits of the schemes under which they were paid. Pre-1953 contributions can be taken into account for old age (contributory) pension purposes in satisfying the first two conditions set out above. They cannot be used in calculating the yearly average condition.

It has been acknowledged that the application of the "yearly average" rule can lead to particular difficulties for people who, for one reason or another, have 'gaps' in their insurance records leading to a diluted yearly average. Over the past decade, therefore, measures have been introduced to alleviate the impact of this rule including the following: the 1999 Social Welfare Act provides for special arrangements for self-employed people, aged 56 or over in April 1988 (when compulsory social insurance for the self-employed was introduced) and who have at least five years contributions paid since then. This pension will be paid at a flat-rate of 50 per cent of the standard maximum rate; in November 1997 the yearly average was reduced to ten contributions, as set out above; homemaker provisions were introduced in 1994 to cater for periods of time spent outside the workforce caring either for children or incapacitated people;pro rata pensions for people with “mixed insurance” records were introduced in 1991, the rate payable being in proportion to the periods of insurance completed at the rate appropriate for old age/retirement pensions; and in 1988, the creation of a special partial pension for those people whose earnings exceeded the insurable limit prior to its abolition in 1974 and who have a yearly average of at least five.

I am committed to ensuring that contributory pension coverage is available to as many categories as possible. With this in mind, and as already indicated in my Social Welfare Bill speech, a detailed review is now under way by the Department of all the contribution conditions generally applying to the old age (contributory) and retirement pensions, with particular reference to the possibility of using contributions paid prior to 1953.

Given the many complex issues involved in this, I consider it important that the views of older people are taken into account. Therefore, a consultative process with the main groups representing the interests of older people will take place shortly.

As I have previously indicated, I will report to the House on the outcome of the review which will, in the normal course, be publicly available when it has been considered by the Government. It is now expected that the review will be completed by mid-1999.