I propose to take Questions Nos. 9 and 130 together.
To qualify for the old age contributory pension, a person must have entered insurance at least ten years before pension age. This condition has been a feature of the scheme since it was introduced in 1961. The purpose of the condition is to ensure that entitlement to the pension is limited to those who have made a reasonable level of contributions to the social insurance fund during the course of their careers.
This condition applies to self-employed persons, including farmers, in the same way as it applies to all other insured people. Accordingly, self-employed persons who became insured for the first time when social insurance was extended to the self-employed in 1988 and who were then aged 56 or over will not qualify for the old age contributory pension. However, self-employed persons in that age group who had been insured as employed contributors for any period prior to age 56 could qualify for the old age contributory pension. Such insurance can be combined with insurance as a self-employed contributor for old age pension purposes.
It should be noted that these social insurance contributions payable by self-employed also give cover for widow's contributory pension to which entitlement can arise after three years insurance. The self-employed will have been paying contributions for three years by end of March of this year. We are coming to a significant point in March in so far as the self-employed are concerned in relation to the widow's contributory pension.
Detailed consideration has been given by my Department to the possibility of providing for entitlement to the old age contributory pension to persons who entered insurance for the first time as self-employed contributors less than ten years before pension age. A number of options were considered and an initial actuarial assessment of the costs involved was carried out. On the basis of the rates of pension payable in 1989, when the costings were made, it was estimated that the net cost of paying old age contributory pensions to all self-employed contributors who were aged between 56 and 66 in April 1988 would amount to — I am talking about the net cost — £756 million over the lifetime of the persons concerned. The extra rate of contribution which would have to be paid by self-employed contributors to finance such an extension would be 2.4 per cent over a 50 year period.
Refunds of the old age pension element of the contribution may be made to those who entered insurance less than ten years before pension age and who fail to qualify for either an old age contributory or non-contributory pension. This includes provision for the payment of interest on such refunds due after 1 November 1990. The rate of interest is equal to the increase in the consumer price index for each full calendar year after the date the contributions have been made.
The Government have also given a commitment in the Programme for Economic and Social Progress to examine the possibility, in the context of structural reform in agriculture, of an arrangement whereby farmers in the older age groups selling, leasing or transferring their farms will be provided with a retirement incentive related to means. In this same context of structural reform, the interaction with the position of farmers aged 56 and over who pay PRSI contributions but who will not qualify for a contributory pension will be considered. Discussions on this matter have already commenced between the officials of my Department and the Department of Agriculture and Food.
