Dáil Éireann Debate, Thursday - 3 February 2022
316. Deputy Bernard J. Durkan asked the Minister for Social Protection the extent to which applicants with insufficient contributions to qualify for the State pension (contributory) might have their cases reviewed with the possibility of a pro rata payment; and if she will make a statement on the matter. [5741/22]
View answer317. Deputy Bernard J. Durkan asked the Minister for Social Protection if persons who have insufficient contributions to qualify for a State pension (contributory) might have the option of applying for a reduced rate of pension or refund of contributions; and if she will make a statement on the matter. [5742/22]
View answerI propose to take Questions Nos. 316 and 317 together.
The 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). As the actuarial value of the State Pension is estimated at over €300,000, it is reasonable to require people claiming a contributory pension to have made at least 10 years of paid contributions over the term of their working life.
Where a person enters the social insurance system over the age of 56 they will not be able to make sufficient social insurance contributions to be awarded a State Pension (Contributory) on reaching 66 years of age because it has a minimum contribution requirement of 520 contributions (i.e. 10 years). In such cases a level of social insurance refund may be applicable.
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% of the maximum rate of the State Pension (Contributory). Alternatively, an Increase for a Qualified Adult (IQA) is paid, generally, where a pensioner has an adult dependent (e.g. a spouse, civil partner or cohabitant who is financially dependent upon him/her), who does not have enough contributions to claim a maximum rate State Pension (Contributory) in his/her own right. The payment rate for the IQA is up to 90% of a full contributory pension. The most advantageous payment for a pensioner will depend upon their individual circumstances.
The Pensions Commission was established in November 2020 to examine the sustainability of the State Pension system and the Social Insurance Fund, in fulfilment of a Programme for Government commitment. The Commission was an independent body comprised of knowledgeable and experienced academics, pension experts, members of civil society and representatives of workers and employers. Once it completed its work and fulfilled its obligations, the Commission was dissolved. The Commission's Report was published on 7th October 2021. The report, Technical Sub-Committee's working papers and submissions made to the Pensions Commission are available on the website, pensionscommission.gov.ie.
The Commission’s Report is a comprehensive report that takes account of an assessment of various analyses of population, labour force and expenditure projections; an examination of international approaches; and responses to an extensive consultation process. It has unambiguously established that the current State Pension system is not sustainable into the future and that changes are needed, and it has set out a wide range of recommendations in this regard - including the full transition to a Total Contributions Approach (TCA) model, phasing out of the Yearly Average approach, allowing a person to continue paying PRSI contributions past State Pension Age to improve their social insurance record for State Pension (Contributory) purposes and measures to enhance pension provision for long-term carers (in excess of 20 years).
The report was referred to the Joint Committee on Social Protection, Community and Rural Development and the Islands for its views which were published yesterday. Separately, as set out in its terms of reference, the Commission on Taxation and Welfare is considering the report of the Pensions Commission in the context of its review of potential changes to the social insurance system.
In the interests both of older people and future generations of older people, the Government intends to consider the comprehensive and far reaching recommendations in the Commission’s Report very carefully and holistically. My officials are currently examining each of the recommendations and are consulting across Government through the Cabinet Committee system. I think it is really important that we complete that work before reaching conclusions on any specific recommendation. I intend to bring a recommended response and implementation plan to Government by the end of March 2022.
The State Pension is the bedrock of the pension system in Ireland. It is extremely effective at ensuring that our pensioners do not experience poverty. This Government is committed to ensuring that this remains the case for current pensioners, those nearing State Pension age and today’s young workers including those who are only starting their careers.
I hope this clarifies matters for the Deputy.
