Dáil Éireann Debate, Tuesday - 9 June 2015
180. Deputy Róisín Shortall asked the Tánaiste and Minister for Social Protection her views, if any, on moving to a system whereby weekly pension rates are determined by total contributions, or to otherwise change the system so that social insurance contributors who commenced contributions early in their life are not disadvantaged, as at present. [21473/15]
Amharc ar fhreagraThe State pension is a very valuable benefit and is the bedrock of the Irish pension system. Therefore, it is important to ensure that those qualifying have made a sustained contribution to the Social Insurance Fund over their working lives and the reform measures introduced to date go somewhat toward that goal. To ensure that the individual can maximise their entitlement to a State pension, all contributions paid over their working life from when they first enter insurable employment until pension age are taken into account when assessing their entitlement and the level of that entitlement.
Since 1961, when contributory pensions were first introduced, the average contributions test has been used in calculating pension entitlement. Work has commenced on changing this to a total contributions approach, where anomalies arising with the current method would not occur. Under the total contributions approach, the number of contributions recorded over a work life will more closely reflect the rate of pension payment received. It is expected that the total contributions approach to pension qualification will replace the current average contributions test for State pension (contributory) for new pensioners from 2020, although that date is subject to change, as this is a very significant reform with considerable legal, administrative, and technical challenges to be overcome in its implementation. When proposals are agreed, legislation will be brought forward to underpin the necessary changes.
I believe that it is important that the changes be announced well in advance of introduction, to enable those workers affected to include the new factors into their retirement planning.
