Dáil Éireann Debate, Tuesday - 11 October 2016
250. Deputy Richard Boyd Barrett asked the Minister for Social Protection if he will consider disallowing casual or short-term work early in a person's life that causes a large gap in their work history and therefore brings down the yearly average of PRSI contributions in respect of contributory pensions; and if he will make a statement on the matter. [29319/16]
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). 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. Once someone has worked some insurable hours in the course of a given week, they will be liable for a weekly contribution for that week, regardless of the amount of hours involved, and that weekly contribution will be equal in value to that of someone working full time and paying much more into the Social Insurance Fund. In the event that they are casual workers and have worked no hours that week at all during that particular week, they will generally be eligible for a credited contribution, which again is of equal value to a paid contribution, when calculating the level of pension payment (although a minimum total of 520 paid weekly contributions are required to have any level of entitlement).
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. While this payment is means-tested, it has significant income and capital disregards.
I hope this clarifies the matter for the Deputy.
Question No. 251 withdrawn.
