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.
As the Deputy will be aware, pension ratebands were changed from 1 September 2012 in response to the economic crisis of the time. This resulted in quite a number of people who qualified for the State Pension Contributory after that date receiving lesser payments compared to those who qualified before it.
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 Home Caring Periods. This approach benefited many people, particularly women, whose work history included an extended period of time outside the paid workplace, while raising families or in a caring role.
People whose pensions were decided under the 2000-2012 ratebands (in other words those born before 1 September 1946) were subject to a significantly more generous 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 September 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 Home Caring 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 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.
For those with insufficient contributions to meet the requirements for a State pension (contributory), they may qualify for a means tested State pension (non-contributory), the maximum personal rate for which is €237 (over 95% of the maximum rate of the contributory pension). This rate of payment does not include rent allowance, household benefits or fuel allowance. Alternatively, if their spouse is a State pensioner and they have significant household means, their most beneficial payment may be an Increase for a Qualified Adult, based on their personal means, and amounting up to 90% of a full contributory pension.
I hope this clarifies the matter for the Deputy.