Wednesday, 20 January 2021

Questions (349)

Seán Canney

Question:

349. Deputy Seán Canney asked the Minister for Social Protection if she will consider changing the calculation used for State pension (contributory) in relation to home caring periods in order that it is the same as the non-homecaring periods yearly average calculation, which would result in increased pension payment for former carers many of whom received little or no payment for their valuable work. [2583/21]

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Written answers (Question to Social)

The Programme for Government “Our Shared Future” includes a commitment to examine options for a pension solution for carers, the majority of whom are women, particularly those of incapacitated children, in recognition of the enormous value of the work carried out by them. This Government acknowledges the important role that carers play and is fully committed to supporting them in that role.

As the Deputy is aware, the public policy and social issues in relation to funding a sustainable and adequate State pension system are complex. As a consequence, the Programme for Government also committed to establishing a Commission on Pensions to examine a range of issues including sustainability, eligibility, contributions and calculation methods. The Terms of Reference for this Commission includes consideration of how people who have provided long-term care for incapacitated dependents can be accommodated within the State pension system. The Commission has been established, has already commenced work and is scheduled to report to me on its work, findings, options and recommendations by 30th June 2021. The Government has committed to taking action having regard to the recommendations of the Commission within six months of the recommendations being made.

The State pension system already gives significant recognition to those whose work history includes an extended period of time outside the paid workplace, often to raise families or in a full-time caring role, through the award of credits and/or the application of the Homemaker’s Scheme (Yearly Average method for payment calculation) and/or the application of HomeCaring Periods (Aggregated Calculation Method). Details of these are -

- Credits – PRSI Credits are awarded to recipients of Carer’s Allowance (and Carer’s Benefit) where they have an underlying entitlement to credits. Credits are also awarded to workers who take unpaid Carer’s Leave from work.

- Homemaker’s Scheme - The scheme, which was introduced with effect from 1994, is designed to help homemakers and carers qualify for State Pension (Contributory). The Scheme, which allows periods caring for children or people with a caring need to be disregarded (from 1994), can have the effect of increasing the Yearly Average.

- HomeCaring Periods – This Scheme makes it easier for a home carer to qualify for a higher rate of State Pension (Contributory). HomeCaring Periods can only be used under the Aggregated Calculation Method (also known as Interim TCA or T12) of pension calculation. HomeCaring Periods may be awarded for each week not already covered by a paid or credited social insurance contribution.

The Homemaker's Scheme and HomeCaring Periods cannot be used together to calculate State Pension (Contribution) entitlement.

Since April 2019 all new State (Contributory) Pension applications are assessed under all possible rate calculation methods, including the Yearly Average and Aggregated Contribution Method, with the most beneficial rate paid to the pensioner. The elements which make up each method are set out in legislation. 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 system. The cost of paying the State Pension is already increasing by approximately €1 billion every 2.5 years or so, due to demographic pressures alone. It is also estimated that my Department will spend over €8.8 billion on State Pensions in 2021.

It should be noted that if a person does not satisfy the conditionality to qualify for State Pension (Contributory), they may qualify for the means-tested State Pension (Non-Contributory), the maximum rate of which is over 95% that of the maximum rate of the State Pension (Contributory). 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 to up to 90% of a full contributory pension.

I hope this clarifies the matter for the Deputy.