The State pension (contributory) is a very valuable benefit. Therefore, with the challenges facing the pension system given increased number of older people living longer, it is important to ensure that those qualifying for State pension (contributory) have made a sustained contribution to the Social Insurance Fund over their working lives.
As provided for in Budget 2012, from September 2012, new rate bands for State pension (contributory) were introduced. These additional payment rate bands more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life benefit more in retirement than those with lesser contributions.
The exchequer savings arising are estimated to be in the region of €5m for 2014 and €8 million in 2015. However, it is expected that this will increase over time, as the provisions are applied to new pensioners entering the system.