Tuesday, 1 April 2014

Questions (274)

Stephen Donnelly

Question:

274. Deputy Stephen S. Donnelly asked the Minister for Social Protection regarding the State contributory pension, if a person who has worked for 50 years from 1964 to 2014, who has paid 2,253 contributions plus taxes is entitled to €225.80; if a person who worked for 30 years from 1979 to 2009, who has paid 1,434 contributions plus taxes is entitled to €230.30; if a person who worked for ten years from 2004 to 2014, who has paid 520 contributions plus taxes is entitled to €230.30; her views on whether it is fair that a person who makes fewer than 25% of the number of contributions of another could be paid more per week; and if she will make a statement on the matter. [14957/14]

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Written answers (Question to Social)

The 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 and the reform measures introduced to date go somewhat toward that goal.

Currently a person's date of entry into insurance is taken as the date used for averaging purposes. To qualify for a state pension a person must:

- have entered insurance before the age of 66;

- have at least 520 paid contributions; and

- satisfy a yearly average (a yearly average of 48 contributions paid and/or credited is required for a full rate pension).

An increase for a qualified adult, which is means tested, may be made in respect of an adult dependant who does not qualify for a pension in their own right, or who qualifies for a lower rate of pension due to gaps in his/her insurance. The means tested non-contributory pension may be available to an individual who meets the qualifying criteria.

The yearly average test has been in existence since 1961 when contributory pensions were first introduced. The system was designed to ensure that people could qualify for contributory pensions immediately rather than waiting for contributions to build up and to suit a system where social insurance coverage was less comprehensive and people could move in and out of coverage as a result of the nature of their employment and/or earnings. Social insurance is now long established and is comprehensive in terms of the workforce covered.

It is planned to move to a total contributions approach to determine pension eligibility in the future. This would entail a situation where the total number of contributions paid over a working life will closely reflect the rate of payment received. For example, 30 years contributions (1,560) could qualify a person for maximum State pension (contributory). A person would accumulate 1/30th of a pension for each year of contributions up to a maximum of 30/30ths inclusive of a certain number of credits.

Question No. 275 withdrawn.