Dáil Éireann Debate, Thursday - 21 April 2016
4. Deputy Maureen O'Sullivan asked the Tánaiste and Minister for Social Protection the reason persons must work 48 years to qualify for a full pension; her views on whether this is a particularity long period and that the tier system is insufficient; and if her attention has been drawn to the fact that some women, in particular, feel this is unfair as many choose to work part-time after giving birth to children. [7876/16]
View answerThe State pension (contributory) is one of the State pension schemes, and its rate of payment is related to contributions made over years into the Social Insurance Fund. As such, those with a stronger attachment to the workforce, who have paid more into that fund, are more likely to be paid under that scheme. There are a number of criteria which must be satisfied in order to qualify for a State pension contributory. These include that the person must be aged 66 or over, and that they have at least 520 paid contributions, i.e., a minimum of 10 years of paid contributions. Since 1961, when contributory pensions were first introduced, the ‘yearly average’ contributions test has been used in calculating the level of pension entitlement, where the total contributions paid or credited are divided by the number of years of the working life (from their entry into insurable employment up to the year prior to their reaching State pension age). Payment rates are banded. For example, someone with a yearly average of 48 contributions will qualify for a full pension, whereas someone with a yearly average of 20 will qualify for a pension at the 85% rate.
Working part-time does not generally reduce entitlement, as part-time workers also pay weekly PRSI contributions, and these will generally be of equal value to the more expensive contributions paid by full-time workers.
However absences from the labour force - when contributions were neither deducted from pay nor credited in respect of a social welfare payment, and where voluntary contributions were not made – may impact upon the rate of a person’s pension. This can be mitigated by the homemaker’s scheme, which makes qualification for State pension (contributory) easier for some people who take time out of the workforce for caring duties. The scheme, which was introduced in 1994 and took effect for such homemaking periods from that date, allows up to 20 years spent caring for children under 12 years of age (or caring for incapacitated people over that age) to be disregarded when a person’s social insurance record is being averaged for pension purposes. It should be noted however that the scheme will not, of itself, qualify a person for a pension. The standard qualifying conditions must also be satisfied.
If someone does not qualify for a full rate contributory pension as a result of an intermittent PRSI record, the social protection system provides alternative methods of supporting such people in old age. For example, if their spouse has a contributory pension, they may qualify for an Increase for a Qualified Adult amounting up to 90% of a full rate pension, which by default is paid directly to them. Alternatively, they may qualify for a means-tested State Pension (non-contributory), amounting up to 95% of the maximum contributory pension rate.
