Dáil Éireann Debate, Tuesday - 20 March 2018
928. Deputy Bernard J. Durkan asked the Minister for Employment Affairs and Social Protection the new procedure for calculation of the State pension (contributory) entitlement with particular reference to self employed with or without business partnerships but may have shared responsibilities; and if she will make a statement on the matter. [11838/18]
Amharc ar fhreagraA policy to introduce the Total Contributions Approach (TCA) to pensions calculation was adopted by Government in the National Pensions Framework in 2010, as was the decision to base the entitlements of all new pensioners on this approach from around 2020. The Government has announced its intention to proceed with that policy in its recently published Roadmap for Pensions Reform. To that end, and to inform the final design of the system, a public consultation will be conducted later this year, and the necessary legislative, technical and administrative arrangements will be determined and developed thereafter.
The Government also announced in January that those affected by the 2012 rateband changes will also have the option of availing of a TCA-based pension, if it is to their advantage. The TCA model being made available to them will award a maximum rate pension for those with 40 years contributions (including up to 20 years HomeCaring credits), and pro-rata payments for those with fewer contributions. Up to 10 years ordinary credits (e.g. for Jobseekers or Illness Benefit) may also be used, subject to the total number of HomeCaring and ordinary credits not exceeding 20 years.
Where a person has been in self-employment from the introduction of compulsory Class S contributions from 1988 until reaching State pension age, they may already receive a maximum rate State pension contributory, subject to meeting the general conditions for payment. If not, they may still benefit from the new TCA arrangements, depending on their circumstances.
The main focus of this reform has been to reward those who either made contributions into the Social Insurance Fund, or to recognise the contribution of those who took time out of the workforce for caring duties. If someone made very little of either such contributions, and if their means are such that they would not qualify for a 95% state pension non-contributory (e.g. if they have substantial private or occupational pensions), they may benefit more from existing arrangements.
The new system for calculation of a person’s rate of pension does not impact upon whether a person was liable for PRSI during a particular period. If they have paid the required contributions at a reckonable rate – including Class S – they will be used in the calculation of their entitlements. If they do not, that will remain unchanged by this reform.
I hope this clarifies the matter for the Deputy.
