The social welfare system is primarily a contingency-based system, with entitlement based on a number of defined contingencies such as sickness, unemployment, old age or widowhood. There are two basic principles which underpin the Irish social insurance system. Firstly there is the contributory principle which links the PRSI contributions that a person has paid and their entitlement to a range of benefits and pensions. Where a person has sufficient PRSI contributions, then benefits and pensions may be paid, subject to legislative provisions, where a particular contingency arises, and without a means test. Secondly there is the solidarity principle where the benefits and pensions that are paid are not directly related to the amount of PRSI contributions paid by insured persons. PRSI contribution income is instead redistributed to support contributors who are more likely to have an income need as a result of circumstances that have arisen in their lives. In this regard, it should be noted that most PRSI contributors do not experience all of the contingencies during their life. For example, one contributor may never require access to Invalidity Pension whereas it may be a crucial support for another. It should also be noted that access to Widow’s/Widower’s/Surviving Civil Partner’s Contributory Pension is available to those who have been married or in a civil partnership only, and that scheme will not benefit someone who has been single all their life.
The purpose of the benefits and pension system is to provide a person with an adequate income. The rate of payment is set with this objective in mind, and the fact that there are a number of ways one can qualify for a pension does not mean someone may qualify for multiple PRSI-funded pensions. There is a principle of one person, one payment, which generally applies across the social welfare system. It can happen that a person may experience more than one contingency at the same time. For example, an unemployed person may also become sick and incapable of work. The PRSI paid by the person and their employers only provides coverage for one payment at such times. Under the legislation for the schemes, if a person experiences more than one of these contingencies at the same time, generally he or she can receive only one payment. Similar legislative provisions apply in the case of PRSI funded pensions, and a person cannot be in receipt of both a State pension contributory and a Widow’s/Widower’s contributory pension at the same time. It should be noted, however, that the maximum personal rate of a Widow/Widower’s contributory pension is significantly higher for those aged 66 or over than it is for a widow or widower of working age, as it is aligned with the maximum personal rate for the State pension contributory. This principle of no more than one main payment per person is common to social security systems across the world.
Arrangements in relation to private pensions vary across the wide range of schemes and investment products available, each of which may have different benefits depending on a scheme’s rules or product type. Private occupational pensions generally require additional contributions to provide survivor’s benefits. In nature they differ significantly from State pensions. Private pensions do not generally have the broad social solidarity based provisions common to social welfare pensions, nor the high level of direct State subsidy which exists for State pension schemes financed from the Social Insurance Fund.
Amending the State pensions system, to allow for two pensions be paid to one person, would be a significant change to the system, providing certain people with the pension income considered necessary for two people, and would greatly increase the cost of the pensions system. This extra cost would have to be financed from either an increase in the rate of PRSI contributions, an increase in the Exchequer subvention to the scheme, or a reduction in the rate of payments. I have no plans to introduce such a change.
