The State pension contributory is a very valuable benefit and is the bedrock of the Irish pension system. Since 1961, when contributory pensions were introduced, the average contributions test has been used in calculating pension entitlement. Once over 16 years of age, the date a person enters into insurable employment is the date used for averaging purposes. The total reckonable contributions paid or credited are divided by the duration of the period from that date to pension age, and the average produced is a factor in the rate of entitlement. For example, if someone entered insurable employment 45 years before pension age, and had a total of 1,800 reckonable contributions, their yearly average would be 40 contributions (i.e. 1,800 divided by 45).
Under this yearly average system, the homemaker’s scheme makes qualification for State pension (contributory) easier for those who take time out of the workforce for caring duties. The scheme, which was introduced in and took effect from 1994, allows up to 20 years spent caring for children under 12 years of age (or caring for incapacitated people over that age) to be disregarded when a person’s social insurance record is being averaged for pension purposes. By disregarding these periods, the duration of the working life is reduced under the ‘yearly average’ calculation, thereby making the yearly average higher, as total contributions are divided by a small number.
The homemaker’s scheme is expected to be in place until the system is changed to a total contributions approach, which is under consideration for introduction from 2020. In this context, the deadline for applications to the homemaker’s scheme has been extended on a number of occasions – most recently in 2013 (SI 596 of 2015 refers). It was therefore decided that the period for which retrospective applications for the homemaker’s scheme be allowed be extended again, to allow further people make backdated claims to this scheme while the yearly average system is in place.
On this occasion, given that the total contributions approach reform is scheduled to be in place by 2020, it was decided that the extension for applications is to 31 December 2020, for periods up to 31 December 2019.