Dáil Éireann Debate, Tuesday - 2 November 2021
572. Deputy Catherine Murphy asked the Minister for Social Protection if the allowable periods for the homemaker’s scheme qualifies as contributions for the purposes of meeting the required 520 PRSI contributions to qualify for a contributory pension; if not, the applicable years; and if she will make a statement on the matter. [51997/21]
View answerThe State Pension (Contributory) is a PRSI-based pension, financed by contributions made by current workers and their employers, and paid to pensioners, at a rate based upon their PRSI record when working. A person is required to have a minimum of 520 paid reckonable PRSI contributions in order to qualify for the State Pension (Contributory). The actuarial value of the State Pension is estimated at over €300,000 which requires people who claim a contributory pension to have made at least 10 years of paid contributions over the 50 year term of a working life. 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.
The State pension system provides 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.
This is provided through the award of credits and/or the application of the Homemaker’s Scheme (under the Yearly Average method for payment calculation) and/or the application of HomeCaring Periods (under the Aggregated Contribution Method (also known as the interim Total Contributions Approach).
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.
- The 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 Contribution Method (also known as the Interim Total Contributions Approach) of pension calculation. HomeCaring Periods may be awarded for each week not already covered by a paid or credited social insurance contribution (regardless of when they occurred) to a maximum of 20 years.
Since April 2019, all new State (Contributory) Pension applications are assessed under all possible rate calculation methods, including the Yearly Average and the interim Total Contributions Approach, with the most beneficial rate paid to the pensioner. The elements which make up each method are set out in legislation.
It should be noted that if a person does not satisfy the conditionality to qualify for State Pension (Contributory), s/he 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 his/her spouse is a State pensioner and has significant household means, his/her most beneficial payment may be an Increase for a Qualified Adult, based on his/her personal means, and amounting to up to 90% of a full contributory pension.
The Pensions Commission was established in November 2020 to examine sustainability and eligibility issues with the State Pension and the Social Insurance Fund, in fulfilment of a Programme for Government commitment.
The Commission has now concluded its work and has submitted its final report to me. The report has been published on the Government website. It is extremely detailed, running to several hundred pages, and covers a range of complex matters in relation to the Pensions system which will require very careful consideration. That will be done over the next 6 months with a view to bringing a recommended response and implementation plan to Government by the end of March 2022.
I hope this clarifies the matter for the Deputy.
