The National Pensions Framework (2010) proposed that a “Total Contribution Approach” (TCA) should replace the yearly average approach, for new pensioners from 2020. The aim of this approach is to make the rate of contributory pension more closely match contributions made by a person.
The TCA will ensure that the totality of a person’s social insurance contributions - as opposed to the timing of them - determines their final pension outcome. In particular it will benefit people whose work history includes an extended period of time outside the paid workplace, while raising families or in a full-time caring role.
This approach will make it easier for many post-2012 pensioners affected by the 2012 rate band changes who are currently assessed under the yearly average model, to qualify for a higher rate of the State Pension (contributory). A person who reached pension age after 1st September 2012 and has a 40 year record of paid and credited social insurance contributions, subject to a maximum of 20 years of the new HomeCaring periods, will qualify for a maximum contributory pension where they satisfy the other qualifying conditions for the scheme. Up to 10 years of other credits, for example, awarded when on Jobseekers or Illness Benefit, may also be used, subject to the total of such credits and HomeCaring periods not exceeding 20 years.
So, for example, a person might receive a maximum pension based on 20 years paid PRSI contributions, 5 years jobseeker credits, and 15 years HomeCaring Credits (before or after 1994), over a 50 year period and qualify for a maximum rate pension, despite additional gaps of up to 10 years. Those with fewer contributions will have a pro-rata entitlement. For example, someone with 18 years PRSI contributions and 18 years homecaring may qualify for a 90% contributory pension.
As the Deputy has pointed out, the National Pensions Framework proposals would have treated homemaking credits and ordinary credits with a standard approach. However, while it is true they would be counted in the same manner, the conditions of their awarding significantly differed. Under the Framework, homemaking credits would only have had effect from 1994, with both types of credits being limited to 10 years, and outcomes for women under this model would have been significantly worse than those for men. It was decided, therefore, that there should be a rebalancing of the proposed TCA formula, with up to 20 years homemaking periods being recognised under TCA2012, for periods both before and after 1994.
I hope this clarifies the matter for the Deputy.
