Dáil Éireann Debate, Tuesday - 26 April 2022
1064. Deputy Peter Burke asked the Minister for Social Protection if she will clarify in relation to the contributory pension application that before home caring credits can be added to an application that an applicant needs to have a minimum 520 paid contributions and if this is discriminating against those home caring for periods in the past who now do not qualify for the full contributory pension; and if she will make a statement on the matter. [20592/22]
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). As the actuarial value of the State Pension is currently estimated at approximately €380,000, 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.
Subject to the standard qualifying conditions for State Pension (Contributory) also being satisfied, the State pension system already 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 a person's Yearly Average.
- HomeCaring Periods – 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. HomeCaring Periods can only be used under the Aggregated Contribution Method (also known as the Interim Total Contributions Approach) of pension calculation.
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% 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’s Report was published on the 7th October 2021 and it set out a wide range of recommendations including enhanced pension provision for long-term carers (defined as caring for more than 20 years). 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 Pensions Commission’s Report very carefully and holistically. I intend bringing a recommended response and implementation plan to Government in the coming weeks.
I hope this clarifies matters for the Deputy.
