Dáil Éireann Debate, Tuesday - 10 October 2017
679. Deputy Kevin O'Keeffe asked the Minister for Employment Affairs and Social Protection if she will re-examine the situation whereby a female employee paying PRSI contributions remained out of work to rear children and now finds herself in a position where she will receive a reduced rate of contributory State Pension in view of the fact that no PRSI contributions were paid while she worked at home. [42842/17]
Amharc ar fhreagraThere are a number of pension schemes operated by my Department, and the most advantageous of these to a person will depend upon a number of factors, including his or her PRSI contribution record, means, and some other factors regarding personal circumstances.
The contributory State Pension is one such payment and is based on contributions made into the Social Insurance Fund, which finance that pension scheme on a pay-as-you-go basis. People who have made significant contributions into the Fund are more likely to receive their pensions under that scheme than under other pension schemes.
To ensure that individuals can maximise their entitlement to a contributory State Pension, all contributions, paid or credited, 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.
The homemaker's scheme makes qualification for a higher rate of contributory State Pension easier for those who take time out of the workforce for caring duties. The scheme, which was introduced and took effect for periods 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, subject to the standard qualifying conditions for contributory State Pension also being satisfied. This has the effect of increasing the yearly average of pensioners who qualify for that scheme, which is used to set the rate of his or her pension.
Where a person does not qualify for a full-rate contributory pension, he or she may qualify for an alternative payment. If the person's spouse has a contributory pension, her or she may qualify for an increase for a qualified adult, amounting up to 90% of a full-rate pension. Alternatively, the person may qualify for a means-tested non-contributory State pension, which amounts to up to 95% of the maximum contributory rate. The large majority of both of these payments are made at the maximum rate.
Work is under way to replace the yearly average system with a Total Contributions Approach, which it is hoped will replace the current one from 2020. Under this approach, the rate of pension paid will more closely reflect the total number of contributions made by people, not when they paid them. The position of homemakers is being carefully considered in developing this new system. Following publication of the current actuarial review of the Social Insurance Fund, a refined proposal will be developed. My Department will conduct a period of consultation with relevant stakeholders on possible approaches. Following that process, I will submit a proposal to Government seeking approval for the selected approach, and then proceed to introduce legislation to give effect to this reform.
I hope this clarifies the matter for the Deputy.
