Tuesday, 5 November 2019

Questions (1065)

Anne Rabbitte

Question:

1065. Deputy Anne Rabbitte asked the Minister for Employment Affairs and Social Protection the reason the date of 1 September 1946 was chosen as the cut-off in the creation of the State pension review launched earlier in 2019; if an analysis of those left out of the review has been conducted; and if she will make a statement on the matter. [44823/19]

View answer

Written answers (Question to Employment)

A policy to introduce the Total Contributions Approach (TCA) to pensions calculation was adopted by Government in the National Pensions Framework in 2010, as was the decision to base the entitlements of all new pensioners on this approach from around 2020.

In January 2018, I announced the Government Decision to introduce a new interim Total Contributions Approach (TCA) to the calculation of State Pension that will allow pensioners who reached pension age from September 2012 (i.e., those born on or after 1 September 1946), to have their pension entitlement calculated by an interim “Total Contributions Approach” (TCA) which will include up to 20 years of new HomeCaring Periods. This approach is expected to significantly benefit many people, particularly women, whose work history includes an extended period of time outside the paid workplace, while raising families or in a caring role. The TCA will ensure that the totality of a person’s social insurance contributions - as opposed to the timing of them - determines their final pension outcome. The HomeCaring Periods can be claimed for any year in which they occurred - they are not limited to years since 1994.

The interim TCA was introduced to deal with pensioners subjected to new pension ratebands introduced in September 2012 which resulted in a number of such pensioners receiving lower pension payments than pensioners prior to then. People whose pensions were decided under the previous 2000-2012 ratebands (i.e., those born before 1 September 1946) were subject to a significantly more generous payment regime than those who qualified before or afterwards, as a Yearly Average of only 20 contributions per year (out of a maximum of 52) could attract a 98% pension. The effect of those changes, as it impacted upon those new pensioners since 2012, will be familiar to anyone who followed the debate on this matter over the last 6 years. If pre-2012 pensioners were also allowed avail of HomeCaring Credits, their arrangements, as a group, would continue to be significantly more generous than those of post-2012 pensioners. There would also be a very significant additional cost which would be expected to be of the order of several hundred millions of euros each year. This in turn could significantly impact funds for future pension increases with consequential implications for pensioner poverty.

I hope this clarifies the matter for the Deputy.

Question No. 1066 answered with Question No. 1063.