Social Protection Committee report recommends Government address anomalies within current pension law

“In reality, carers, foster parents and stay at home parents are the people most likely to receive a reduced pension on retirement and the Committee in its recommendations is seeking to have some of the anomalies leading to these reduced pensions addressed” said Committee Cathaoirleach Deputy Denis Naughten.

Speaking on the launch of the report, Deputy Naughten said: “This legislation would introduce voluntary deferral of State Pension (Contributory) to allow people reaching age 66 from 1 January 2024 to choose to defer access to the State Pension (Contributory) and to access the pension at any point between age 66 to 70.”

“It also seeks to provide for enhanced pension provision for long-term carers to cover gaps in their contribution record for the purposes of the State Pension (Contributory) and provide for the phasing out of the Yearly Average method of calculating entitlement to the State Pension (Contributory), and the full transition to the Total Contributions Approach for calculating such entitlements.”

“The Committee welcomes this measure for long-term carers of more than 20 years, but we would like to see this extended to long-term foster carers also”.

The Committee is recommending that Home caring credit should cover the full period of all children reaching 12 years old which would avoid a situation at present whereby if there is a gap of greater than eight years between the birth of the oldest and the youngest child, the stay-at-home carer loses out on the benefit because of the children’s age gap.

The Committee also wants the actuarial calculation for pension enhancement over 66 years would also be applied to the Qualified Adult Allowance payment which primarily applies to stay-at-home carers. And the reinstatement of a retrospective process where partners actively working on farms will be eligible to make PRSI contributions for a contributory pension.

It also strongly believes that the Department of Social Protection should introduce an awareness campaign regarding pension entitlements for people who may have periods where they have not made pension contributions, such as carers, and ensure they are aware of the pension implications.

The Committee has made the following recommendations:
• The cut off age of 70 be replaced with 75 and that the enhanced pension would keep increasing until the individual starts drawing down their pension or reaches 75, in light of the fact that life expectancy has increased from 65 to 82 years old.

The actuarial calculation for Pension enhancement over 66 years be applied to the Qualified Adult Allowance.
• Home caring credit should cover the full period of all children reaching 12 years old rather than the 20-year block proposed in the general scheme. This is to avoid a situation whereby if there is a gap of greater than eight years between the birth of the oldest and the youngest child, the stay-at-home carer loses out on the benefit because of the children’s age gap.
• Provisions should be put in place to allow foster carers to avail of long term foster care credit, similar to carers.
• Periods on Farm Assist should be treated retrospectively similar to Jobseekers Allowance. The Committee also recommends that a credited contribution should be granted for all years a farmer was on Farm Assist. This is to facilitate people approaching pension age who will not have an entitlement to contributory pensions, such as small farmers and fishers who had been in receipt of farm assist or fish assist payments.
• The Total Contribution Calculation be based on 30 years as opposed to 40 years’ worth of contributions.
• The Department of Social Protection should introduce an awareness campaign regarding pension entitlements for people who may have periods where they have not made pension contributions, such as carers, and ensure they are aware of the pension implications.
• The reinstatement of a retrospective process where partners actively working on farms will be eligible to make PRSI contributions for a contributory pension.

The Committee endorses the recommendations of the Pension Commission and welcomes the general scheme of this proposed legislation.

Notes to Editor

The Commission on Pensions was established in November 2020 to examine the sustainability and eligibility issues in relation to State pension system and the Social Insurance Fund.
The Commission’s report was published in October 2021 setting out its recommendations to address these issues.
In September 2022, following consideration of the report, the Government issued its response and implementation plan.
The General Scheme represents the legislative provisions required to implement a number of the key elements of this response.
The General Scheme of this Bill aims to deal with a broad range of pension related measures, including:
• the introduction of new flexibilities to the pension age of 66;
• provision for people to be given the choice to work until the age of 70 in return for a higher rate of State pension;
• a move to the total contribution approach exclusively over a ten-year period when calculating the rate of State pension, which was recommended by the pension commission;
• the introduction of a contributory State pension provision for long-term carers of more than 20 years, for the very first time;
• a commitment to explore a new scheme to support people who cannot continue to work in their early 60s and;
• the long-term sustainability of the State pension system to be addressed through gradual, incremental increases in social insurance rates.

Read the report in full here.