I propose to take Questions Nos. 58, 171, 172 and 173 together.
The qualifying conditions for contributory old age pensions require a person to have paid at least 260 contributions at the appropriate rate, enter insurance ten years before pension age and achieve a yearly average of at least ten contributions paid or credited on their social insurance record from 1953, when the unified system of social insurance came into effect, or the date of entry into insurance if later. The minimum yearly average required for a retirement pension is 24 contributions and, in both cases, an average of 48 is required for a maximum rate pension.
Approximately 5,700 applications for standard rate retirement or old age contributory pensions were refused in 2003 because the persons concerned did not have sufficient contributions. However, those refused payments may subsequently qualify for a pro rata pension under EU or mixed insurance provisions. Also, people who cannot meet the average contribution test for a retirement pension may be able to meet the less stringent conditions for the old age contributory pension.
The conditions are intended to ensure that those qualifying for contributory pensions have had a reasonable association with the social insurance system over their working lives and that the payment they receive reflects, as far as possible, their overall contribution to the system.
A number of measures have been introduced in recent years to provide minimum pensions for people who would otherwise not receive a payment. In 1997, the average number of contributions required for the old age contributory pension was reduced from 20 to ten. Also, special pensions were introduced to deal with perceived anomalies in relation to pre-53 insurance and for self-employed people who were over 56 when that group became compulsorily insured in 1988. These pensions, which are based on payment of just 260 contributions, are paid at 50% of the standard rate.
As already indicated, pro rata pensions are available in cases involving insurance at different rates and where contributions have been made in other EU countries and countries with which Ireland has a bilateral agreement.
In considering changes to the system, it is necessary to uphold the contributory principle which underpins entitlement. This requires that people meet a minimum contribution threshold and also that payments, as far as possible, reflect the level of contribution which individuals make. In this regard, I consider that the range of pro rata and special pensions that are available gives adequate recognition to the level of contributions which individuals have made. Of course, the old age non-contributory pension is also available and may be more advantageous to someone with limited means.
Further developments in qualifying conditions will be considered in the light of phase two of the report on the qualifying conditions for old age and retirement pensions which is due for publication in the new year.