Dáil Éireann Debate, Wednesday - 15 April 2015
71. Deputy Stephen S. Donnelly asked the Tánaiste and Minister for Social Protection her plans to make adjustments to the home-maker's scheme; when these changes are planned to come into force; and if she will make a statement on the matter. [14308/15]
Amharc ar fhreagraThe homemaker’s scheme was introduced in 1994 to make qualification for State pension contributory (SPC) easier for those who take time out of the workforce for caring duties. The scheme allows up to 20 years spent caring for children under 12 years of age, or incapacitated people, to be disregarded when a person’s social insurance record is being calculated for pension purposes. The effect of this is to reduce the number of years by which the person’s contributions are divided, thereby increasing their yearly average, making it easier for them to qualify for a maximum rate SPC. However, it is important to note that the homemaker’s scheme will not, of itself, qualify a person for a SPC. The standard qualifying conditions for the SPC must also be satisfied. These require a person to enter insurable employment at least ten years before pension age, pay a minimum of 520 contributions at the correct rate (credited contributions do not satisfy this condition) and achieve a yearly average of at least 10 contributions paid or credited on their record.
The Government has no plans to backdate this scheme prior to 1994 as it was previously estimated it may cost approximately €160 million annually to backdate to 1953. In any event, under the current rules, the costs of the scheme are expected to increase in the coming years due to the increase in female employment rates since 1994. Consequently, any decision to change the scheme would have budgetary consequences and would have to be considered in the context of budget negotiations.
Work has commenced on replacing the current averaging approach used to assess entitlement to the SPC, with a total contributions approach. As part of this work, the position of those who spent a number of years out of the labour force on home-caring duties will be carefully considered, particularly in the context of ensuring equality of outcomes for women and men. It is expected that this approach to pension qualification will replace the current average contributions test for State pension (contributory) from 2020, although that date is subject to change, as it is a very significant reform with considerable legal, administrative and technical challenges to be overcome in its implementation. It is intended that changes would be announced well in advance of their introduction, to allow workers factor this into their retirement planning.
