Wednesday, 4 December 2019

Questions (245)

Bernard Durkan


245. Deputy Bernard J. Durkan asked the Minister for Employment Affairs and Social Protection if the case of applicants for the State pension (contributory) who fall short of the required number of contributions in order to qualify has been examined; if pro rata payments will be considered in such cases in view of the fact that such contributors receive no benefit for their contributions; and if she will make a statement on the matter. [50625/19]

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Written answers (Question to Employment)

A person is required to have 520 contributions paid to qualify for the State Pension (contributory). It is reasonable to require people who seek a contributory pension to have made at least 10 years paid contributions into the Social Insurance Fund which finances it, over 50 years of working age life.

While it was lower in the past when PRSI coverage was less widespread, legislation was introduced in 1997 to increase this threshold to 520 weeks, or 10 years of contributions. A fifteen year period was allowed pass between that legislation being enacted and the threshold being raised to this level, which would have been sufficient for most people to achieve the required contributions.

The social welfare system is primarily a contingency-based system, with entitlement based on a number of defined contingencies such as sickness, unemployment, old age or widowhood.

There are two basic principles which underpin the Irish social insurance system.

Firstly there is the contributory principle. Under this principle there is a direct link between the PRSI contributions that a person has paid and entitlement to a varying range of benefits and pensions. Where a person has sufficient PRSI contributions, then benefits and pensions may be paid as of right, where a particular contingency arises and without a means test.

Secondly there is the solidarity principle. Under this principle the benefits and pensions that are paid are not directly related to the amount of PRSI contributions paid by insured persons. PRSI contribution income is instead redistributed to support contributors who are more vulnerable. In this regard, it should be noted that some PRSI contributors do not experience all of the contingencies during their life. For example, one contributor may never require access to Invalidity Pension whereas it may be a crucial support for another.

A person aged 66 or over with insufficient PRSI contributions to qualify for a full rate State Pension (Contributory) may claim a State Pension (Non-Contributory) if they have an income need. The current maximum weekly personal rate is €237, which is over 95% of the maximum State Pension (Contributory) rate. While it is means-tested, there are very 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.