Dan Neville
Question:252 Deputy Dan Neville asked the Minister for Social and Family Affairs the position regarding the contributory pension in respect of a person (details supplied) in County Limerick. [2692/10]
View answerThursday, 21 January 2010
Questions (257)
Written answers
Spouses who are actively engaged in a commercial partnership, including the operation of a farm, as opposed to simply being the joint owners of a property, are treated as individual self-employed contributors and are thus liable to social insurance contributions. On foot of a Programme for Government commitment an information leaflet, ‘Working with your spouse: how it affects your social welfare contributions and entitlements', has been developed between the Department of Social & Family Affairs and the Revenue Commissioners to set out the social welfare and tax implications of families co-working in a shared business. It was published on the 25th of June, 2008.
The leaflet clarifies that spouses who operate in a commercial partnership may be brought into the social insurance system, subject to certain criteria. In this way, both spouses incur a liability to pay self-employed PRSI and build up entitlement towards a contributory state pension and other social welfare benefits. It is open to any person to apply for recognition of a commercial partnership. However, to be eligible for State Pension, the legislation stipulates that at least 52 self-employment contributions must be paid by a person before they reach 66 years of age. Contributions paid by a pension applicant's spouse do not satisfy this condition.
Applications for pension or benefit are submitted and processed in the usual way. The qualifying conditions for State Pension (Contributory) require the applicant to:
have entered insurable employment before attaining the age of 56 years
have at least 260 paid contribution weeks since entry into insurance
satisfy the yearly average condition.
In addition, Section 110(1) of the Social Welfare (Consolidation) Act 2005 provides that a self-employed contributor shall not be regarded as satisfying the qualifying conditions unless:
(a) the person has paid self-employment contributions in respect of at least one contribution year before attaining pensionable age, and
(b) all self-employment contributions payable by him or her have been paid.
According to the records of this Department, the self-employment contributions were all paid by the person concerned after her 66th birthday. She does not therefore satisfy the condition at (a) above and has no entitlement to a State Pension (Contributory) and has been notified of this decision on the 12th January 2010.
Section 110(1)(a) of the Social Welfare Consolidation Act, 2005, has been on the statute books for over twenty years and therefore, there has not been a change in policy in relation to the requirement to have paid self employment contribution prior to reaching age 66 in order to qualify for a State Pension (Contributory). An overpayment will be determined in the above case and the customer will be notified and requested to repay the amount involved. However a Recovery Officer may reduce/cancel an overpayment based on the circumstance of an individual case, in line with the governing legislation.
In conclusion, therefore, it should be noted that while the publication of the leaflet ‘Working with your spouse: how it affects your social welfare contributions and entitlements' clarified existing procedures in relation to the recognition of commercial partnerships between husbands and wives for social insurance purposes, including retrospective payment of social insurance, it did not involve a change in existing policy or administration. In particular, the clarification of the position did not alter people's potential entitlements and all applicants for the state pension (contributory) must continue to satisfy the eligibility conditions as contained in legislation, and outlined above.
The department understands and apologises for the upset and distress caused to this person and regrets the administrative error involved.