Dáil Éireann Debate, Tuesday - 3 October 2023
392. Deputy Richard Bruton asked the Minister for Social Protection the current estimated date for the commencement of the provision which would see total contributions determine the size of pension paid; if phasing arrangements are planned for the introduction of same and if she will outline the detail. [42137/23]
View answerOne of the landmark reforms to the State Pension system that I announced in September of last year is a ten-year phased transition to the Total Contributions Approach and the abolition of the Yearly Average method. This was part of recommendations from the independent Pensions Commission following its in-depth analysis of the State pension system.
During the transition period, individual pension rates will be based on the best of the Total Contributions Approach, or a rate based on a mix of the Yearly Average and Total Contributions Approaches, with the proportion accounted for by Yearly Average reducing from 90% to zero over 10 years and the proportion accounted for by the Total Contributions Approach increasing commensurately.
This fairer system, which removes existing anomalies with the Yearly Averaging system, will calculate pension payments based on the number of social insurance contributions made by a person over his or her working life, with significant pension credits granted to people who have taken time out of the workplace for caring responsibilities.
Officials in my Department are currently working on the legislation and systems to support the introduction of the ten-year phased transition to the Total Contributions Approach and the abolition of the Yearly Average method. I expect to bring the legislation required to introduce the Total Contributions Approach before the Oireachtas soon, with the phased transition commencing from January 2025.
I hope this clarifies the matter for the Deputy.
