Dáil Éireann Debate, Wednesday - 29 November 2017
51. Deputy Niamh Smyth asked the Minister for Employment Affairs and Social Protection her plans to re-examine the situation for women who lost out on their full State contributory pension due to leaving the workforce to rear their children; and if she will make a statement on the matter. [50546/17]
Amharc ar fhreagraThere are two State pensions. Firstly, the State pension non-contributory is a means-tested pension funded from taxation. Secondly, the State pension contributory, which is not means-tested, is paid from the Social Insurance Fund. Accordingly, it is important to ensure those qualifying for that pension have made a sustained contribution to the Social Insurance Fund over their working lives.
To ensure that the individual can maximise their entitlement to a 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 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 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. This has the effect of increasing the yearly average of the pensioner, which is used to set the rate of his or her pension.
Backdating it in respect of periods before its introduction in 1994 is estimated to cost €290 million per year, and this figure would rise annually and at a faster rate than the overall cost of State pensions.
It is clear that this is a very substantial sum, which would not be affordable without very significant cut-backs in other areas. Therefore, a change where everyone affected by the 1994 cut-off point for the Homemakers scheme would receive a maximum rate pension, is not a feasible option at the present time.
Where someone does not qualify for a full rate contributory pension, they may qualify for an alternative payment. If their spouse has a contributory pension, they may qualify for an increase for a qualified adult, amounting up to 90% of a full rate pension. Alternatively, they may qualify for a means-tested State pension non-contributory, which amounts up to 95% of the maximum contributory rate.
I plan to introduce a total contributions approach to the calculation of the State Pension (Contributory) to replace the yearly average approach from around 2020. The position of homemakers will be carefully considered in the context of that reform.
Separately, I have committed in this House to ask my officials to carefully examine approaches that might assist some women in the situation you refer to, particularly if they were impacted upon by the rate-band changes in 2012. When they report to me, I will consider the options available, and bring the matter to cabinet committee for consideration and thereafter to Government for approval.
I hope this clarifies the matter for the Deputy.
