Written Answers. - Pension Provisions.
Bernard J. Durkan
Question:
40
Mr. Durkan
asked the
Minister for Social, Community and Family Affairs
if he will provide pro rata pension in all cases regardless of the number of contributions; and if he will make a statement on the matter.
[2019/00]
The qualifying conditions for the old age contributory and retirement pensions apply to all insured people – both employees and self-employed. These qualifying conditions require a person to have entered social insurance before age 56, for the old age contributory pension, and age 55, for the retirement pension; and a minimum of 156 contributions paid. This requirement for all contributors will increase to 260 and 520 paid contributions from April 2002 and April 2012, respectively; and a yearly average of, at least, ten contributions paid or credited from 1953, when the unified system of social insurance came into effect, or the date of entry into social insurance, if later. The reduction in the yearly average requirement from 20 to ten was introduced in November 1997, leading to a pro rata old age contributory pension. Where a person has a yearly average of between ten to 14 contributions, he/she is entitled to a pension rate at 50% of the standard maximum rate while those with averages of between 15 to 19 receive a pension rate equivalent to 75% of the standard maximum rate. Where the yearly average is between ten and 19, a minimum of 260 contributions must have been paid.
Provision is, therefore, already made in the social welfare system forpro rata pensions. In addition, any person who fails to qualify for, say, an old age contributory or retirement pension under the standard qualifying conditions and who has worked abroad, may qualify for an EU or bilateral pro rata pension, based on a combination of his/her Irish and foreign social insurance contributions.
Pro rata pensions were also introduced, in 1991, for people with ‘mixed insurance' records – that is, where a combination of both full and mixed rate social insurance contributions have been paid. The rate of pension payable is in proportion to the periods of insurance completed at the rate appropriate for old age contributory/retirement pensions.
Last April I introduced new pension arrangements in line with this Government's commitment to extend contributory pensions coverage to people who narrowly failed to qualify for a pension. These relate to a very specific group of people, namely, self-employed people who were 56 years of age or over in April 1988 when social insurance was extended to the self-employed and who could not qualify for a pension as they did not satisfy the standard requirement of having entered insurance at least ten years before pension age.
A special old age contributory pension is, therefore, now available to those self-employed people who were aged 56 or over in April 1988 and who have, at least, five years' contributions paid since then. The rationale behind this five-year paid contribution condition is to ensure that entitlement to a pension is limited to those who have made some reasonable level of contributions to the Social Insurance Fund during the course of their careers. Payment is at a flat-rate of 50% of the standard maximum rate with equivalent increases for adult and child dependents, where applicable. I consider these new arrangements to be fair reflecting, as they do, a certain consistency of commitment to the Social Insurance Fund over a given period of time. Of course, where a self-employed person does not qualify for this pension the facility still exists for him or her to apply for a refund of the pension element of the social insurance contribution, provided that he or she does not qualify for the means-tested old age non-contributory pension.
The question of paying apro rata contributory pension in all cases regardless of the level of contributions has to be addressed in the wider context of the fundamental principles of the social insurance system, namely, in terms of equity and redistribution. Any person who has made a reasonable level of contributions over their working career is entitled to expect and receive a contributory-based pension. The National Pensions Board in 1993 considered that a ‘reasonable attachment' to social insurance constituted a minimum of ten years. The special arrangement, described above, which I introduced for certain self-employed people, was a sympathetic response to the predicament of some people who, through no fault of their own, could not qualify for a pension in accordance with the standard qualifying conditions.
In terms of the overall situation, the Department has been reviewing the qualifying conditions for the old age contributory and retirement pensions. This review has been undertaken with a view to ensuring that social welfare contributory pensions continue to meet the needs of current and future generations of contributors. The Department is, at present, finalising a report on the first phase of this review process and I expect to receive this shortly. I have already indicated to the House on a number of occasions that when the report has been considered by the Government, I will report to the House at that stage.
