Tuesday, 23 July 2019

Questions (2724)

Brendan Griffin

Question:

2724. Deputy Brendan Griffin asked the Minister for Employment Affairs and Social Protection the reason homemaker's credits awarded under a State pension (contributory) review have not been considered under the averaging system in respect of a person (details supplied) in County Kerry; and if she will make a statement on the matter. [32786/19]

View answer

Written answers (Question to Employment)

For those people who reached state pension age since September 2012, two different methods of calculating their entitlement to a contributory state pension are used. There are several differing elements involved in each calculating method. For example, the Yearly Average (YA) method does not include a limit on credited contributions. The interim Total Contributions Approach (TCA), as launched in January 2018, does have a limit on credits but allows up to 20 years HomeCaring periods be added to paid contributions to increase a person’s rate. The YA method rewards those with a shorter timespan between first and last social insurance contributions while TCA looks at a person’s aggregated contributions without regard for timespan. Under YA, there is no maximum number of contributions required, while under TCA 40 years is the maximum required.

The elements which make up each method are set out in law. Accordingly, it is not possible to choose those elements from either method that may prove most advantageous to an applicant. To allow pensioners choose the elements in how their pension is calculated would likely incur very significant costs which could further undermine the sustainability of the State Pension. My department will spend over €8 billion on pensions in 2019 and this figure is already increasing year on year to the tune of c.€1 billion every five years based on demographic changes alone. Instead, pensioners are paid using whichever of the two methods of calculation is most beneficial to them.

The person in question applied for a pension and was assessed with having a YA of 19, based on 571 reckonable paid contributions and 356 reckonable credited contributions over a 49 year working life. The rate payable to a person with a YA of 19 is equivalent 65% of the maximum rate of pension.

Following review under the new arrangements, having included their due 291 HomeCaring periods, the person qualified for a rate equivalent to 58.56% of the maximum rate pension. As the person is already in receipt of a 65% pension, it is more financially beneficial for them to remain on their existing rate.

A review outcome letter has issued informing the person concerned that their existing rate of payment will continue unchanged.

I hope this clarifies the matter for the Deputy.