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State Pensions Reform

Dáil Éireann Debate, Tuesday - 6 February 2018

Tuesday, 6 February 2018

Ceisteanna (598)

Willie O'Dea

Ceist:

598. Deputy Willie O'Dea asked the Minister for Employment Affairs and Social Protection her plans to put in place protection for persons due to retire in the period 2020-30 to ensure they are not financially disadvantaged and do not receive a reduced rate of pension when the total contributions approach replaces the yearly average approach for entitlement to a contributory pension in 2020; and if she will make a statement on the matter. [5858/18]

Amharc ar fhreagra

Freagraí scríofa

A policy to introduce the Total Contributions Approach (TCA) to pensions calculation was first adopted by Government in the National Pensions Framework in 2010, as was the decision to assess all new pensioners under this approach from around 2020.

The Government at that time was aware that there would be some people who would benefit, and some people who would have a lower rate of entitlement as a result of TCA, but the rates of payment would be on a more equitable basis than under the existing system, and the anomalies inherent in the Yearly Average system would be removed. Under the TCA model proposed, people with 20 years of paid contributions (over a period of up to 50 years) could generally expect a full pension, if they also had 10 years of credited contributions (including Homemaker credits for periods from 1994), and this combined with the safety net of the State pension (non-contributory) was considered to be a fair balance in an important reform of the State pension (contributory). This has remained the policy of successive Governments since then.

Later this year, my department will engage in a public consultation regarding the final model that will be in place from 2020. This consultation will be a key input to the design of the final structure of the TCA model to be submitted to Government later this year. It will include proposals for the number of years required for a maximum rate of pension, and the treatment of credited contributions and homecaring periods. Subsequent to Government decision, it is intended that legislation be introduced to the Oireachtas.

People who have a lower State pension (contributory) entitlement can apply for and may qualify for a higher State pension (non-contributory) of up to 95% of the maximum contributory rate. This is a means-tested payment, but over 70% qualify at the maximum rate due to generous income disregards. This option will remain in place following 2020.

I hope this clarifies the matter for the Deputy.

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