Skip to main content
Normal View

State Pensions

Dáil Éireann Debate, Wednesday - 21 April 2021

Wednesday, 21 April 2021

Questions (1151)

Carol Nolan

Question:

1151. Deputy Carol Nolan asked the Minister for Social Protection if she will address concerns from a person (details supplied) that changes in pension eligibility and contribution rules introduced in 2012 have had an adverse impact on the pension amount they are set to receive; and if she will make a statement on the matter. [19310/21]

View answer

Written answers

There were two changes to pension eligibility and contribution rules introduced in 2012.

In April 2012, the minimum number of paid contributions required to qualify for a State pension (contributory) increased from 260 to 520. This change did not impact on the person concerned as they have the required 520 contributions.

In September 2012 new rate bands for State pension (contributory) were introduced. These new rate bands more accurately reflect an applicant's social insurance history and ensure that those who pay more contributions during a working life are likely to benefit more in retirement than those with less frequent contributions during working life.

The person concerned reached pension age on 11 May 2017. According to the records of my Department, they had a total of 1,036 qualifying full-rate paid and credited contributions from their date of entry into insurable employment on 9 September 1969 to end-December 2016.

The Homemakers Scheme was applied to the calculation of the person’s pension entitlement. This scheme was introduced on 6 April 1994 and allows up to 20 years (since 1994) spent caring for children under 12 years of age or for incapacitated person(s) to be disregarded in calculating an applicant’s yearly average, and for homemaker credits to be awarded for homemaking periods of less than a full contribution year. The effect of this is to reduce the number of years by which an applicant’s contributions are divided, thereby increasing their yearly average and making it easier for them to qualify for the most beneficial rate of state pension (contributory).

This person’s yearly average was calculated as 23 contributions and gave them an entitlement to a standard State pension (contributory) at 85% of the maximum rate. They were notified in writing of this decision on 21 April 2017.

The person concerned was employed in the public sector prior to 1995, during which period modified contributions were payable. This reduced PRSI rate conveys entitlement only to Widow (er)'s and Orphan's Contributory Pensions and limited Occupational Injuries Benefits but is not reckonable for State pension (contributory) purposes. However, modified contributions can be combined with full-rate contributions and credits to give an entitlement to a mixed insurance pro rata State pension (contributory), provided the applicant has 260 full-rate contributions. The person’s entitlement to a mixed insurance pro rata State pension (contributory) was determined, based on their combined record of full-rate and modified social insurance contributions. Having applied this test the resultant pension entitlement is lower than the 85% of standard State pension (contributory) already awarded to the person concerned.

An interim Total Contributions Approach (TCA) was introduced in January 2018 as an alternative to the ‘yearly average’ method of calculating pension entitlement for those State pension (contributory) customers born on or after 1 September 1946 and therefore affected by post-2012 Budget pension rates. The TCA provides for up to 20 years of HomeCaring Periods in their pension entitlement calculation for applicants who took time out of the workplace for parenting or caring duties.

When this person’s pension entitlement was assessed under the TCA, there was no change in their previous rate of 85% of maximum pension. This decision issued to them in writing on 24 May 2019.

The person concerned is in receipt of the correct rate of pension payable commensurate with their social insurance record held by my Department.

I hope this clarifies the position for the Deputy.

Top
Share