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Pension Provisions

Dáil Éireann Debate, Wednesday - 26 September 2018

Wednesday, 26 September 2018

Questions (61)

Brendan Smith

Question:

61. Deputy Brendan Smith asked the Minister for Employment Affairs and Social Protection her plans to amend legislation regarding the contributory State pension with particular reference to persons whose insurance contribution records were interrupted due to periods in receipt of farm assist; if the periods that persons were on farm assist can be credited for insurance purposes; if this issue will be considered in the context of the social welfare Bill 2019; and if she will make a statement on the matter. [38785/18]

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Oral answers (11 contributions)

The Minister is aware that there is a cohort of people who have reached, or who are about to reach, pension age who were paying the insurance contribution towards a contributory pension. Their insurance record was broken when they availed of the farm assist scheme. Will the Minister assure me that the plight of those people will be considered in the consultation process that is under way, or which may be well advanced, in the calculation of entitlements to contributory pensions?

The farm assist scheme was introduced in 1999 to provide income support for low income farmers. I think the scheme was introduced by Deputy Brendan Smith's party-----

It was introduced by former Deputy Michael Woods.

It replaced the former smallholders’ unemployment assistance payment. In line with the then existing arrangements for unemployment assistance, including the smallholders and pre-retirement allowances, the income of farm assist recipients was exempt from class S pay related social insurance, PRSI, for self-employed workers. Recipients of farm assist who had previously paid class S social insurance had the option of paying voluntary contributions to maintain their social insurance record, provided they satisfied all of the qualifying conditions. Since 1 January 2007, the exemption from class S PRSI has been removed and those receiving jobseeker’s allowance and farm assist are subject to class S PRSI as self-employed contributors on their self-employed income, provided their annual income is €5,000 or more.

There are currently no plans to amend legislation relating to the State contributory pension to award a maximum rate of payment to pensioners who had a period between 1999 and 2006 when they were exempt from paying PRSI contributions. However, a person aged over 66 with limited PRSI contributions over the course of his or her life may claim a State non-contributory pension if he or she has an income need and this entitlement is not based on the payment of social insurance contributions but on the basis of need. The maximum weekly rate is €232 which is over 95% of the maximum contributory pension rate. While it is means tested, there are significant disregards which are to the benefit of claimants and a significant majority of such pensioners are paid at the full rate. I hope this clarifies the matter for the Deputy.

I thank the Minister for her reply. She referred to the fact that farm assist was introduced in 1999. At that time Deputies O'Dea, Durkan and I, as well as most Members of this House representing rural constituencies, were very strong in our advocacy for replacing the smallholder's allowance with farm assist unemployment assistance. The Minister's predecessor at that time, Dr. Michael Woods and the late Joe Walsh, the then Minister for Agriculture and Food, were to the fore in introducing the new scheme which took account of present income circumstances, unlike the smallholder's assistance payment, which was very much based on historical income for the previous 12 months. As we all know, farm incomes can change very suddenly if there is an outbreak of disease and a total or partial depopulation of a herd, for example.

In the instances I have come across, those farmers who took up farm assist for a short time continued to make tax returns but were not informed by Revenue or by the Department that they needed to make a contribution to maintain their insurance record. There was always an understanding that if one was in receipt of a social welfare payment, one's social insurance record was maintained but that did not happen in this instance. The cases with which I am dealing all involve people who did not employ an accountant to file their tax returns because they were not in a financial position to do so. They made their returns themselves and were not aware that their insurance contribution record was being broken. They had always hoped, through making their insurance contributions, that on reaching pension age they would be entitled to a full contributory pension. Unfortunately, that is not happening now.

I cannot speak to how - or even whether - the Department or the Revenue Commissioners imparted the information that would have been valuable to the people to whom the Deputy refers. I can only look into the matter on the Deputy's behalf. I can relate to the fact that their contribution record having been broken has resulted in them getting a lesser pension payment now. The options that would have been available to them were to make those contributions or, just before retirement, to buy credits to supplement their annual contributions over their lifetime of work. Is the Deputy speaking about a large cohort of people?

My own constituency work suggests this affects a relatively small number of people.

I must ask a favour of the Deputy. I would like to arrange a meeting with him at which he can give me examples of the cases in his constituency so that I can follow through to see how many people have been impacted, while also determining if the Department or Revenue informed people of the options available to them. What the Deputy has just brought to my attention seems unjust. I will ask my officials to call the Deputy later today to arrange a proper discussion of the matter.

I thank the Minister and would be very glad to take up her offer of a meeting. In many instances there was a dramatic change in farm income due to issues like depopulation of a herd or adverse weather conditions. Many of the people involved were filling out their own forms because they were not in a position to engage an accountant to do their paperwork. They often did not read the forms in full. I have gone through this with the people involved and am satisfied that they were not informed by Revenue or the Department of the break in their insurance contributions record. I would be very glad to take up the Minister's offer of a meeting and hope that we can progress this matter in the context of the review of entitlements to contributory pensions.

It is not just farmers who do not read documents in full. That is a charge that can probably be made against every single one of us. The situation the Deputy describes does not sound fair to me, so let us meet and talk about it further.

I thank the Minister for her understanding and commitment in this regard. Given the size of the next grouping of questions, I ask both the Minister and the Deputies concerned to abide by the ruling of the Chairman with regard to time. I invite Deputy Heydon to introduce his question.

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