There are a number of payments and pensions paid by my Department to people over State Pension Age. One of these is the State Pension (Contributory), qualification for which is based on a number of criteria, including that of a minimum of 520 qualifying contributions, which have been paid into the Social Insurance Fund. For those who have paid the required contributions at a reckonable rate – including Class S (self-employed) - these will be used in the calculation of their entitlements.
As the actuarial value of the State Pension is currently estimated at approximately €380,000, I believe 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, before qualifying for a payment.
From the Department's records, which include all applications for State Pension (Contributory) in the given year, the following number of people had less than 520 contributions from 2017 to date.
|
Year
|
SPC disallowed less than 520
|
|
2017
|
1229
|
|
2018
|
1330
|
|
2019
|
1297
|
|
2020
|
1319
|
|
2021
|
1539
|
|
2022
|
1092 (to date)
|
Where a person aged 66 or over does not satisfy the conditions to qualify for a SPC or qualifies for less than the maximum rate, they may instead qualify for one of the following:
- The means-tested State Pension (Non-Contributory) (SPNC) which is a means-tested payment (based on their share of household means) with a maximum payment of 95% of the SPC; or
- An increase for a qualified adult (based on their own means), amounting up to 90% of a full rate SPC pension where their spouse has a contributory pension; or
- Where their spouse/civil partner is deceased, a widow's/widower's/civil partner's contributory pension, which they may claim either based on their spouse's or their own social insurance record. The qualifying conditions for this require fewer contributions paid (260) than the SPC and the current maximum personal rate for those aged 66 or over is €253.30, i.e. the same as the maximum rate of the SPC, with allowances (notably the Living Alone Allowance) payable where applicable.
Where contributors enter insurable employment, either as employees or self-employed, after they have attained the age of 56 and have no entitlement to the SPC or SPNC, then the pension element of the contributions paid by both employed and self-employed contributors may be refunded.
In September, I announced a series of landmark reforms to the State Pension system in response to the recommendations from the Pensions Commission. The set of measures represent the biggest ever structural reform of the Irish State Pension system.
One of the key measures is the introduction of a flexible pension system in Ireland. Under this new system, from January 2024, people will still be able to retire at 66 and draw-down their pension in exactly the same way as they can today. In addition, there will be new flexibility so that people can choose to defer their pension, work longer and receive a higher pension payment.
The flexible State Pension system is about providing people with choice. People will decide for themselves what best suits their needs and circumstances. For example, in the case of a person who reaches age 66 and does not have sufficient contributions to qualify for a full pension, they will now have the option to work for longer to build up additional entitlements. If a person has less than 10 years PRSI reckonable paid contributions, they can use this period to establish entitlement. A person will also have the option to continue working between age 66 and 70 and receive an actuarially based increase in their weekly payment rate.
I hope this clarifies the matter for the Deputy.
