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State Pension (Contributory)

Dáil Éireann Debate, Thursday - 3 May 2018

Thursday, 3 May 2018

Questions (9, 10)

Aindrias Moynihan

Question:

9. Deputy Aindrias Moynihan asked the Minister for Employment Affairs and Social Protection when legislation will be brought forward to give effect to the approach that will correct the anomalies relating to contributory pensions post 2012; and if she will make a statement on the matter. [19251/18]

View answer

Martin Heydon

Question:

10. Deputy Martin Heydon asked the Minister for Employment Affairs and Social Protection the timeframe for reviews of contributory pensions for those who took time out of work to care for the family, following changes announced in 2017; and if she will make a statement on the matter. [19300/18]

View answer

Oral answers (11 contributions)

Deputy Heydon has indicated that he wants Deputy Deering to take his question. I have no difficulty with that. I call Deputy Aindrias Moynihan to introduce his question.

The people who lost out to the unfair 2012 pension cuts know that time is not on their side. It was right and proper for the Minister to announce that it would be corrected earlier this year. She stated in March that there would be legislation and that people would be contacted in the autumn with a view to payment from the beginning of next year. It is now May and there is no legislation. While it is a small slippage, people are conscious of time. They want to ensure that there will be no further slippage and that it will be delivered.

I propose to take Questions Nos. 9 and 10 together.

The introduction of a total contributions approach, TCA, to pensions calculation was signalled by the then Government in the national pensions framework in 2010, with a target date of 2020 for its implementation. On 23 January last, this Government agreed to a proposal that will allow pensioners affected by the 2012 changes in rate bands to have their pension entitlement calculated on a TCA basis, including provision for up to 20 years of a new home caring credit.

TCA ensures that the totality of a person’s social insurance contributions, as opposed to the timing of them, determines what their final pension outcome will be. In particular it will benefit people whose work history includes an extended period of time outside the paid workplace raising families or in a full-time caring role. Crucially, unlike the proposed homemaking credits proposed in 2010, the home caring credit now proposed will apply to periods both before and after 1994. This recognises that most people reaching pension age between 2012 and 2019, if they had taken a home caring break, would most likely have done so before 1994.

This approach will make it easier for many post-2012 pensioners affected by the 2012 rate band changes and who are currently assessed under the yearly average model to qualify for a higher rate of the contributory State pension. A person who reached pension age after 1 September 2012 and who has a 40 year record of paid and credited social insurance contributions, subject to a maximum of 20 years of the new home caring credits, will qualify for a maximum contributory pension where he or she satisfies the other qualifying conditions. Up to ten years of other credits can be awarded when they were on jobseekers or illness benefit and they are also subject to the total credits not exceeding 20 years.

Legislation has to be drafted and enacted to enable implementation of these arrangements, and a number of options regarding the best approach to passing that legislation are being considered. At this stage I propose to introduce the legislation as part of the social welfare budget Bill later this year. Following this, what is most important is that the IT solutions are in line with the legislation because I have made a commitment to pay people from the first quarter of next year. I must ensure that the IT systems are developed to proceed with those plans. Accordingly, it is planned that the reviews will commence in the final quarter of this year, with the first payments being made in the first quarter of 2019.

The commitment we made in January for the payments to be dated from 26 March last still stands. The legislation will be introduced as part of one of our other Bills this year, as opposed to a stand-alone measure, and the IT systems will be ready and up and running to start making payments to the women and men who were affected by the band rate changes in 2012 by the beginning of next year.

The Minister originally envisaged contacting people in the autumn about setting out how it would impact on them. Has that date now moved or does she still intend to contact people even though the legislation might not be available until some time later? The other aspect is that people want to see how this will affect their individual situations and the different conditions attached to it, for example, the ten years that will be available for people to get stamps. Will they be defined in the legislation? Will people have to wait until the autumn to see that and to establish how it will affect them or will it be available much sooner? The date from which the payments will commence was originally set as the end of March this year. Is that date still firm? Perhaps the Minister will respond to those three points regarding the ten years, when she will contact people and the date in March.

I thank the Minister for providing for greater clarity as to when the review is to happen and payments will be made. That is the most important aspect. This has been one of the biggest measures of inequality since it was introduced a number of years ago and it is right and proper that it be addressed now. Does the Minister have figures at this stage for the total numbers of people who have missed out? Will all them, male or female, be addressed?

The legislation is being drafted. I hope to bring it forward as part of one of the Bills currently before the House or perhaps the social welfare Bill later in the year. The proposed timeframe for contacting people has not slipped. Everyone who has become a pensioner since 2012 will be contacted, with a view to assessing them under the changes that have been made. During that process they will be assigned a home caring credit if they were carers before 1994, an illness or a job seeking credit. In many cases, they will already have a jobseeker's credit and an illness credit because it would have been ascertained during the original assessment made for receipt of their pension payment. However, they will be completely reassessed. Payments under the new and old systems will be offered. Pensioners will make the decision on which system under which they want to be adjudicated on. Whoever opts to be assessed under the new system will have his or her payment made, backdated to 26 March when all of the other changes made in the budget came into play. For example, those who are expecting to receive their lump sum at some point in quarter one of 2019 will find that it was backdated to 26 March 2018. That process has not changed and is not slipping. As I said, we are drafting the legislation. I will bring it forward as part of some other Bill with the co-operation of the House because we have a good number of pieces of legislation which are due to pass through the Houses between now and the end of the summer. The assessment will start later this year and it will then be up to people to determine whether they want to move to the new system or stay within the old one once the payments start in quarter one of next year.

There are options to have ten and 20-year home caring credits. The Minister also referred to jobseekers' and illness credits. Will people only be able to claim for a period of ten years in those circumstances? Will this be set out in the legislation and when will it happen? People such as Tommy and Richard worked overtime in 1973 and were not allowed to have their cards stamped because their income was too great at that stage. That year is now a gap in their records. Will those who find themselves in that situation be able to claim for a period of ten years? How will those ten years be defined? I understood there was to be a public consultation process and that people would have the opportunity to make submissions. What is the position for people who served abroad as volunteers with Gorta, Concern, the Agency for Personal Service Overseas or any such organisation? They should also be able to access the ten-year credit.

The important aspect is the timeframe. We have lost a number of years and I believe it is important that the Minister adhere to the timeframes she has outlined. The key point is that we will see the first of the payments being made in quarter one of 2019. I am concerned that everyone who lost out, male or female, will have the opportunity to redress the situation. I understand a number of males do not appear to be any better off as a result of the review.

The overall move from an averaging to a total contributions system will probably be the subject of a public consultation process next month. We will I hope have a very detailed and inclusive public consultation process, for both stakeholders and future pensioners, during the course of the summer months. It will be entirely separate from this particular fix. Ten-year credits are not new and will, therefore, not form part of the new legislation. The intention is to provide a 20-year home caring credit for most of the people concerned. They would not previously have been able to avail of it because it was only introduced in 1994. In the example Deputy Aindrias Moynihan gave, the people in question paid stamp in the particular period. They cannot have two stamps, notwithstanding how much they earned.

Their records are blank.

I do not understand why that is the case. Perhaps the Deputy might come to me with the details and I will look into the matter. If they had worked, they should have a stamp; it is as simple as that.

I reassure the Deputy the timelines have not slipped. The commitment we made earlier this year was to address the anomaly, bring forward the legislation, invite people to be adjudicated on or assessed under the new model or the model under which they were being assessed and allow them to choose whether if they wanted to change to the new model. If they choose to move to the new model, the payment will be backdated to 26 March 2018, even though it will not be paid until quarter one of 2019.

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