Dáil Éireann debate -
Thursday, 29 Apr 1999

Vol. 504 No. 1

Written Answers. - Pension Provisions.

Ruairí Quinn

Question:

72 Mr. Quinn asked the Minister for Social, Community and Family Affairs if, further to Parliamentary Question No. 164 of 21 April 1999, he will clarify the rationale behind the decision taken at the time of the introduction of the old age contributory pension in 1961 to allow contributions paid from 1953 to 1961 to be taken into account to satisfy the yearly average requirement condition but not to allow contributions paid prior to 1953 to be taken into account for this purpose; and if he will make a statement on the matter. [11242/99]

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

The old age (contributory) pension scheme was introduced on 6 January 1961, in accordance with the Social Welfare (Amendment) Act, 1960. This was the first major extension to the range of contingencies covered, following the unification of the various insurance codes into a new system of social insurance on 5 January 1953.

As I indicated in my reply to Question No. 164 of 21 April, prior to 1953 coverage for "social-insurance-type" benefits was provided by way of three different types of contributions which gave specific entitlement only to the benefits of the schemes under which they were paid, namely: national health insurance, which provided cover for sickness benefit, maternity benefit and disablement benefit; widow's and orphan's insurance, which provided cover for contributory widow's and orphan's pensions; and uemployment insurance, which provided cover for unemployment benefit.

At the same time as the introduction of the old age (contributory) pension scheme, the rate of social insurance contribution was increased to include an element towards the funding of the new pension scheme. Contributions paid prior to 1961 did not include any such element. However, it was decided to count all contributions paid under the unified scheme – i.e. from January 1953 – towards qualification for the new pension.

Special provisions were introduced for people who had already reached pension age or who were close to reaching pension age (which, at that time, was 70) when the old age (contributory) pension scheme came into operation. These measures permitted certain contributions paid before 1953, under the national health insurance acts, to be taken into account for the ‘yearly average' test for anyone born before 5 January 1903.

In addition, provision was made that contributions paid before 1953, under the national health insurance acts, could be taken into account for the purposes of satisfying the first two qualifying conditions under the old age (contributory) pension scheme; that is, that a person must have (a) entered insurance ten years before pension age; and (b) have, at least, 156 social insurance contributions paid since first entering insurance.

The rationale behind these concessions was to extend coverage for the new pension scheme to as many insured people as possible. If, for example, entitlement to the OACP had been confined solely to social insurance contributions which included a pension element – i.e. social insurance contributions paid since 1961 – ten years would have elapsed from the date of introduction of the new scheme before anyone could have qualified. This would have meant that the first old age (contributory) pension would not have been payable until 1971.

As the Deputy is aware, I have often stated my commitment to ensuring that contributory pension coverage is as widely available as possible. The Department is undertaking a detailed review of the contribution conditions applying to the old age (contributory) and retirement pensions and, as part of this, is reviewing the use of contributions paid prior to 1953 for the purpose of satisfying the ‘yearly average' qualifying condition.