Dáil Éireann díospóireacht -
Tuesday, 16 Feb 1993

Vol. 426 No. 1

Written Answers. - Pension Entitlements of Self-Employed.

Martin Cullen

Ceist:

33 Mr. Cullen asked the Minister for Social Welfare the plans, if any, he has to rectify the situation relating to self-employed persons currently contributing under the self-employed scheme but, who on retirement will not be eligible to obtain old age contributory pension; and if he will make a statement on the matter.

Minister for Social Welfare (Dr. Woods)

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 in the same way as it applies to all insured people. Accordingly, self-employed people 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 would not qualify for the old age contributory pension. They are of course covered for widows' and orphans' pensions.

However self-employed people 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.

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 old age contributory or non-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. However it was found that the net cost would be prohibitive and financing it would be a major burden on those contributing. In this regard costings made in 1989 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 £756 million over the lifetime of the persons concerned. The extra rate of contribution which would have to be paid by self-employed contributors generally to finance such an extension would be 2.4 per cent over a 50-year period.

The present contribution conditions for entitlement to pensions are being examined by the national pensions board and they will be reporting on this and other issues in their final report which is expected shortly. The matter will then be considered further in this context.