Social welfare changes for 2011, including any changes to State pensions, will be considered later this year in the context of next year's Budget preparations, having regard both to needs and to the resources available to meet those needs.
The current Government policy in relation to pensions is laid out in the National Pensions Framework which was launched in March of this year. The Government is committed to seeking to maintain the State pension at 33% of average earnings. The framework includes a number of changes to the State pension in order to make it more transparent, simple and equitable for those who reach pension age.
Recognising that people are living longer and healthier lives, the Government has decided to amend State pension age in three separate stages:
In 2014, the State pension (transition) will be abolished. The effect of this will be to standardise State pension age at 66;
In 2021, the State pension age will be set at 67; and
Finally, in 2028, State pension age will be set at 68.
For those people who wish to postpone drawing down their State pension, arrangements will be put in place to enable them to receive an actuarially increased benefit when they decide to retire.
In addition, for those with contribution shortfalls at pension age, arrangements will be put in place to allow them to receive additional benefit at a later date if they continue to make paid contributions for pension purposes while remaining in work or self-employment.
From 2012 social insurance credits will be introduced for people who take time out of the workforce for caring duties. This will replace the current homemaker's disregard and will assist people — particularly women — to qualify for a contributory pension or a higher level of payment.
In addition, from 6 April 2012, and as provided for in legislation since 1997, the minimum number of paid contributions required for State pension (contributory) will increase from 260 to 520.
From 2020, the way in which eligibility for State pension is calculated will be simplified. Specifically, there will be a switch from the way in which pensions are currently calculated over the average working life. Under the new system, the level of pension paid will be based on the total number of social insurance contributions made by a person over his or her working life.
A person will need to make contributions for 30 years to qualify for a maximum pension. Once a person has the minimum number of paid contributions required, he or she will accumulate 1/30th of a pension for each year of contributions up to a maximum 30 years. Upon introduction of the total contributions approach, the maximum number of credits that can be used for pension purposes will be set at 520.
An implementation group for the National Pensions Framework has been established by my Department and this group will work through the relevant issues in implementing the measures contained in the framework.