Dáil Éireann Debate, Tuesday - 20 November 2012
339. Deputy Jack Wall asked the Minister for Social Protection her views on correspondence regarding backdating the homemaker's scheme; her plans to address the issues raised; and if she will make a statement on the matter. [50925/12]
View answerThe State pension is a very valuable benefit and is the bedrock of the Irish pension system. Therefore, it is important to ensure that those qualifying have made a sustained contribution to the Social Insurance Fund over their working lives.
The homemaker’s scheme makes qualification for the State pension (contributory) easier by disregarding time spent out of the workforce for caring duties. The scheme was introduced in and took effect from 1994. Eligibility for the homemaker’s scheme is conditional on firstly meeting the standard qualifying conditions for State pension. Backdating the scheme to 1964 would involve considerable costs. An analysis undertaken in the 2007 Green Paper on Pensions identified that to backdate the homemaker’s scheme to 1953, the year when the unified system of social insurance was introduced in Ireland, would cost the Exchequer in the region of €160m and to 1973/73, an estimated €150m. Costs in relation to this scheme under the current rules, are expected to increase in the coming years due to the increase in female employment rates since 1994.
In relation to income support, Ireland’s pensioners have the lowest consistent poverty rate and are least likely to be at risk of poverty compared to other groups - pointing to the adequacy of the State pension. Between 2004 and 2010, consistent poverty for older people (those over 65) fell from 3.3% to 0.9%. The ‘at risk of poverty’ rate for people in that age group fell from 27.1% to 9.6% over the same period.
The recently published review of the Social Insurance Fund identified that in the medium to long term, pension related expenditure will account for an increasing proportion of the Social Insurance Fund expenditure - rising from 57% in 2011 to 85% in 2066. The pensioner support ratio is projected to decline from 5.3 workers for every individual over pension age in 2010 to 3.9 workers by 2020 and to 2.1 workers by 2060.
In terms of value for money for those who take time out of the workforce, the report confirms that social insurance benefits offer excellent value for money for those:
- on the lower part of the income distribution,
- those with shorter contribution histories, mostly women
- and the self-employed.
Notwithstanding the changes in the contribution rules and associated rates of payment which were introduced in September 2012, those with lower earnings and those with shorter contribution histories, will continue to obtain the best value for money from the Fund. This can be of particular benefit to women.
In relation to the marriage bar, it should be noted that women affected by the marriage bar are public servants who would not be eligible for the homemakers scheme due to the type of PRSI being paid by them at the time of leaving the workforce. It should be noted that women who do not qualify for a full rate pension may, if their spouse is in receipt of a State pension contributory, receive a qualified adult payment at a higher rate where they satisfy a means test.
A State pension non-contributory pension, which is a means tested payment, may also be payable. Time taken out of the workforce for homemaking and caring duties will continue to be protected by the current disregard. While my Department will keep the homemaker’s scheme under review, any improvements which could result in further costs for the Exchequer could only be considered in a budgetary context. The Government’s priority is to secure economic recovery, promote growth and employment. To this end, the State must pursue a determined deficit reduction strategy. Accordingly, there will be an on-going requirement to curtail expenditure in 2013 and in later years.
The Government is considering the appropriate level of expenditure on the wide variety of schemes and services operated by my Department in 2013 in the context of the forthcoming Budget. The outcome will be announced on Budget Day.
