Dáil Éireann Debate, Wednesday - 20 September 2017
68. Deputy Bríd Smith asked the Minister for Employment Affairs and Social Protection if she will extend the homemakers scheme of contributory pensioners pre-1994 by reversing budget 2012; and if she will make a statement on the matter. [39682/17]
View answerEntitlement levels to the State Pension (contributory) are calculated by means of a ‘yearly average’ calculation, where the total contributions paid or credited are divided by the number of years of the working life. 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 85% of the full rate.
The homemaker’s scheme was introduced in 1994 to make qualification easier for those who took time out of the workforce for caring duties. It allows up to 20 such years, in the period since its introduction, to be disregarded when their record is being averaged for pension purposes. It is estimated that extending this scheme to include periods prior to its introduction in 1994 would cost some €290 million per annum.
The current rate bands applying to the State pension (contributory) were introduced from September 2012, replacing previous rates introduced in 2000. These more accurately reflect the social insurance contributions history of a person.
Alternative payments are available for those with small additional means. It is estimated that to revert to the previous bands would cost at least €60 million in 2018, and this annual cost would increase at an estimated €10 million each year. The main beneficiaries from such a decision would be better off pensioners who do not qualify for means-tested pension payments, and who did not make sufficient contributions into the Social Insurance Fund to qualify for a full rate contributory pension.
Any change of this nature would have to be considered in the context of the Budgetary process, the available resources, and the competing demands for funds in my Department.
I hope this clarifies the matter for the Deputy.
