In August I launched a report on phase 1 of the review of the qualifying conditions for the old age contributory and retirement pensions. This report identified the key issues in relation to qualification conditions. It also sets out suggested guiding principles and outlines a framework for reform. The main proposals outlined in phase 1 of the review are: that a switch be accepted, in principle, from the current yearly average test to a system based on a total contributions approach whereby title to pension would be determined by the total number of contributions paid and credited during a person's working life; a switch be accepted, in principle, from the current system of disregards under the home maker's scheme to a credits based approach; that further recognition be given to contributions paid prior to 1953; and that improvements be made to the old age contributory-retirement pensions, reduced rates bands with a view to simplifying and rationalising these.
The results of the review were anticipated in relation to the last two recommendations mentioned, for example, further recognition of pre-53 contributions and rationalising of old age contributory-retirement pensions rate bands. Some 38,000 pensioners have benefited by the rationalising of the old age contributory pension rates structure with overall increases in weekly personal rates of pension ranging between £7.50 and £12.20.
Almost 2,600 new pensions have been awarded as a result of the further recognition now being afforded to pre-53 social insurance contributions with many people on pro rata pensions also having their position improved.
My Department is still processing applications for these new pensions.
The proposed switch towards a system based on total contributions represents a very significant change in approach for overall pensions policy.
Such a system would be more transparent, simpler and more easily understood by the general public.
The current system is based on the average level of contributions made each year over a person's working life and this has given rise to anomalies and problems.
Much work needs to be done before such a system could be introduced.
In particular, the appropriate level of contributions required for a pension needs to be determined and transitional arrangements will also have to be put in place.
These issues will be examined in the second phase of this review.
The report also examined the homemaker's scheme which was introduced in 1994.
Under this scheme periods spent caring for children or disabled relatives can be disregarded when a person's PRSI record is being assessed for old age contributory-retirement pension purposes. The review proposed that, in principle, the disregard approach should be replaced with one based on credited contributions.
The operative date of the homemaker's scheme was also examined and it was considered that there is no fundamental reason, in principle, why the homemaker provisions should only apply from 1994.
It was recognised that there are significant difficulties and cost considerations in determining an appropriate alternative earlier date. I am considering further the options.