Vol. 480 No. 7
96 Mr. Gregory asked the Minister for Social, Community and Family Affairs if he will extend the pension scheme for the self-employed in line with the long-term request of the Self-Employed Pension Association, Dublin 8. [15084/97]
The issue raised by the Self-Employed Pension Association refers to the requirement that 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 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 qualify 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 which I launched earlier this week. 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.
