Dáil Éireann Debate, Thursday - 16 April 2015
53. Deputy Michael McGrath asked the Tánaiste and Minister for Social Protection the eligibility criteria for the State pension (contributory) that applied pre-2012; and if she will make a statement on the matter. [15018/15]
Amharc ar fhreagraThe State Pension (Contributory) is a very valuable benefit. Therefore, with increased numbers of people living longer, it is important to ensure that those qualifying for State Pension (Contributory) have made a sustained contribution to the Social Insurance Fund over their working lives.
To qualify for the State Pension (Contributory) prior to the reform measures of 2012 a person must have been aged 66 years or over, have started paying social insurance (at full or modified rate) before reaching age 56, and have a total of 260 full rate employment contributions paid where attaining pension age on or after 6 April 2002. With effect from April 2012, the number of paid contributions required to qualify for a State Pension (contributory) increased from 260 paid contributions to 520 paid contributions. This provision was provided for a number of years earlier in the Social Welfare Act, 1997.
The rate at which a State Pension (Contributory) is paid at is determined by the average number of contributions paid or credited per year, with tiered rates applying in respect of bands of contributions. For example, to qualify for the maximum personal rate, a person requires a yearly average of 48 or more contributions per year. From September 2012, new rate bands for State Pension (Contributory) were introduced. This resulted in one of bands (in respect of those with a yearly average of 20-47 contributions), being replaced with three bands (in respect of yearly averages of 40-47, 30-39, and 20-29 respectively). These additional bands more accurately reflect the social insurance history of a person and ensure that those who contribute more during a working life benefit more in retirement than those with lesser contributions.
Those with lower earnings and those with lesser contribution histories continue to obtain the best value for money from the Social Insurance Fund. Even for those with an average of only 20 contributions per year (i.e. 38% of the maximum), the reduced rate State Pension (Contributory) of €196 now paid is 85% of the maximum rate, and is higher than the full rate that applied in 2007.
For those with insufficient contributions to meet the requirements for a full rate State Pension (Contributory), they may qualify for a means tested State Pension (Non-Contributory) which has a maximum personal rate of €219, or just over 95% of the maximum rate of the State Pension (Contributory). Alternatively, if a person’s spouse or civil partner is in receipt of a State Pension (Contributory) they may instead qualify for an Increase for a Qualified Adult of up to €206.30, which is just less than 90% of the maximum personal rate of the State Pension (Contributory).
