Dáil Éireann díospóireacht -
Wednesday, 9 Jul 1997

Vol. 480 No. 2

Written Answers. - Pension Provisions.

Noel Ahern

Ceist:

253 Mr. N. Ahern asked the Minister for Social Welfare the number of self-employed people who are paying or who have paid PRSI, but failed to qualify for an old age pension in view of the fact that they were over 55 when payments commenced; and if he will quantify the matter in relation to the numbers, the cost involved and an estimate in respect of issuing partial pensions. [13434/97]

Noel Ahern

Ceist:

254 Mr. N. Ahern asked the Minister for Social Welfare the position of self-employed people, for example shopkeepers who are forced to retire early due to being mugged at work; the entitlements, if any, they have; the changes, if any, which can be brought about for such people who would not qualify for old age pension in view of the fact that they were over 55 when PRSI contributions commenced. [13435/97]

Breeda Moynihan-Cronin

Ceist:

264 Mrs. Moynihan-Cronin asked the Minister for Social Welfare if he will rectify the anomaly which exists in the case of farmers who were obliged to pay a self-employment stamp after their 56th birthday and who on reaching pension age discover that they do not qualify for a contributory old age pension; and if he will make a statement on the matter. [13644/97]

John V. Farrelly

Ceist:

268 Mr. Farrelly asked the Minister for Social Welfare if he will allow those individuals, who have paid seven to ten years' pension contributions, to become eligible to buy the balance in order to avail of a contributory pension in view of the fact that most of these individuals were self-employed; if the Government will honour a commitment given by the former Opposition spokesperson on Social Welfare that this would be allowed; the number of people in this category of seven to nine-and-a-half years' contributions in the country who have insufficient contributions; and if he will make a statement on the matter. [13779/97]

Minister for Social Welfare (Mr. D. Ahern)

It is proposed to take Questions Nos. 253, 254, 264 and 268 together.

To qualify for the old age contributory pension, a person must, inter alia, have entered insurance at least ten years before pension age. This condition has been a feature of the scheme since its introduction in 1961. The purpose of the condition is to link entitlement to a pension with a reasonable level of contributions to the social insurance fund during the course of a person's career. This condition applies to all insured people.

Accordingly, self-employed people, including farmers, 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 may be covered for widow's, widower's and orphan's pensions subject, of course, to satisfying the normal qualifying criteria.

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 as such insurance can be combined with insurance as a self-employed contributor for old age pension purposes.

Refunds of the old age contributory pension element of the contribution may be made to those who entered insurance for the first time less than ten years before pension age and who fail to qualify for either an old age contributory or non-contributory pension. In this year's Social Welfare Act provision was made that self-employed contributors who entered insurance in 1988, but were already over the age of 56 at that time and who had previously paid social insurance contributions as an employee, would now be able to receive a refund of the pensions element of their self-employed social insurance provided that they do not quailfy for an old age contributory or non-contributory pension. Heretofore, their earlier contributions precluded them from receiving such a refund.

In 1989 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 £756 million over the lifetime of the persons concerned. The extra rate of contribution which would need to be paid by self-employed contributors generally to finance this was estimated at 2.4 per cent over a 50 year period. A review of these figures indicated that the estimated cost is now £500 million, based on numbers of some 20,000 people qualifying.

These costings are currently being reviewed in greater detail in the context of the actuarial review of social welfare pensions being carried out by consultants for my Department. Allowing self-employed persons to buy pension rights by paying the outstanding years contributions in order to qualify for an old age contributory pension would also be very costly to the Exchequer unless the payments made by the individual self-employed contributors were calculated on an actuarial basis. The cost to an individual contributor of buying rights on this basis would be prohibitive. The cost of providing partial pensions would also be very high. A breakdown of the cost for those with seven to nine-and-a-half years' contributions is not readily available.

I have no plans to relax the requirement that a person must have entered insurance at least ten years before pension age. Any person resident in the State can, of course, qualify for an old age non-contributory pension which is payable subject to a means test.

In relation to a self-employed person who is unable to work for medical reasons, it is possible to claim a disability allowance from my Department which is payable subject to a means test.

If the Deputies have particular cases in mind they may wish to give me the details so that they can be investigated to ensure that the people concerned are in receipt of their full entitlements.