Dáil Éireann Debate, Tuesday - 26 January 2016
109. Deputy Jim Daly asked the Tánaiste and Minister for Social Protection to confirm any proposed changes to the number of contributions required to qualify for a State pension (contributory) up to and including the year 2020; and if she will make a statement on the matter. [3058/16]
View answerThe State pension contributory 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. To allow the individual to maximise their entitlement to a State pension, all contributions paid or credited over their working life from when they first enter insurable employment until pension age are taken into account when assessing their entitlement and the level of that entitlement. Since 1961, when contributory pensions were first introduced, the average contributions test has been used in calculating pension entitlement. Once over 16 years of age, the date a person enters into insurable employment is the date used for averaging purposes.
To qualify for a state pension (contributory) a person must:
- have at least 520 paid contributions, and
- satisfy a yearly average condition (a yearly average of 48 contributions paid or credited is required for a full rate State pension (contributory), and reduced rates of payment may be payable for pensioners with lower averages).
There are no legislative provisions which are in place, or which are proposed, to change these rules before 2020.
Work is underway to replace the ‘yearly average’ system with a ‘total contributions approach’. Under this approach, the number of contributions recorded over a working life will more closely reflect the rate of pension payment received. It is expected that the total contributions approach to pension qualification will replace the current average contributions test for State pension (contributory) for new pensioners from 2020, although that date is subject to change, as this is a very significant reform with considerable legal, administrative, and technical components to be put in place prior to its implementation. There has been no decision on the number of contributions that will be required for a contributory pension under such a system. Any changes proposed will be subject to substantial discussion and consultation.
