Since 1961, when the State Pension Contributory (SPC) was introduced, the average contributions test has been used in calculating the rate of pension entitlement. Entitlement is banded, with the maximum rate payable to those with a yearly average of 48-52 contributions, and the minimum rate payable to those with a yearly average in the range of 10-14 contributions per year. Although the rate payable would vary depending on their circumstances, pensioners may claim the State Pension Non-Contributory (currently at 95% of the SPC) if it is more advantageous to them, and they qualify through the means test.
The 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. It does not involve the award of credits.
My Department is working on the details relating to the introduction of a “Total Contributions Approach” as outlined in the National Pensions Framework (2010). This is a very significant reform with considerable legal, administrative, and technical elements in its implementation. An important element in the final design of the scheme will be the position of people who have gaps in their contribution records for various reasons, and this factor is being considered very carefully in developing this reform
Eligibility rules and rates of the State Pension Contributory are varied from time to time by legislation, and changes, including increases or decreases in rates, are generally not applied retrospectively.
I hope that this clarifies the matter for the Deputy.
