Dáil Éireann Debate, Thursday - 4 April 2019
328. Deputy Michael Healy-Rae asked the Minister for Employment Affairs and Social Protection if proposals (details supplied) will be considered for 2020 for contributory pension requirements; and if she will make a statement on the matter. [15810/19]
View answerThe State pension (contributory) is a PRSI-based pension, financed by contributions made by current workers and their employers, and paid to pensioners, at a rate based upon their PRSI record when working. Those with few or no PRSI contributions paid over the years may alternatively qualify for the State pension (non-contributory), which is a means-tested pension, financed by the Exchequer, and paid at up to 95% the maximum rate of the State pension (contributory). There are significant disregards in the household means test for the State pension (non-contributory), and about 70% of those in receipt of it are paid at the maximum rate. Alternatively, if their spouse has a contributory pension, they may qualify for an increase for a qualified adult (based on their own means), amounting up to 90% of a full rate State pension (contributory). The most advantageous payment for a pensioner will depend upon their individual circumstances.
It should be noted that while 10 years paid contributions is the minimum requirement needed to qualify for the contributory state pension, this does not qualify someone for the maximum rate. The rate of payment is decided using either the Yearly Average (YA) method, or the Total Contributions Approach (TCA). With both methods, the large majority of those with only 10 years’ worth of contributions would not be eligible for the full state pension.
The farm assist scheme was introduced in 1999 to provide income support for low income farmers. It replaced the former smallholders’ unemployment assistance payment. In line with the then existing arrangements for unemployment assistance (including smallholders) and pre-retirement allowance, the income of farm assist recipients was exempt from class S PRSI for self-employed workers, and so they did not have to pay into the Social Insurance Fund at that time. 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, including their entitlement to State pension contributory, provided they satisfied the qualifying conditions.
PRSI credited contributions (credits) are only awarded to former employees, to cover gaps in social insurance where they are not in a position to pay PRSI such as during periods of unemployment, illness, etc. Self-employed workers, whether farmers or self-employed in other sectors, do not qualify for credits.
The design of the new Total Contributions Approach to determining the rate of contributory pension to be paid for new pensioners from 2020, including the level of paid contributions required and the availability or otherwise of credits, has not been finalised. In any event, as at present, where a person does not qualify for a maximum rate of the State pension (contributory), the existing alternatives set out above will continue to be available.
I hope this clarifies the matter for the Deputy.
