Thursday, 6 December 2018

Ceisteanna (273, 274)

Bríd Smith

Ceist:

273. Deputy Bríd Smith asked the Minister for Employment Affairs and Social Protection the number of applicants for a State contributory pension since 2012 who have been refused a contributory pension due to the fact that they did not have 520 contributions; and the number of these who had over 260 contributions. [51471/18]

Amharc ar fhreagra

Bríd Smith

Ceist:

274. Deputy Bríd Smith asked the Minister for Employment Affairs and Social Protection the number of applicants for the State contributory pension who failed to qualify due to the fact they did not have 520 contributions but they had over 260 but also failed to qualify for a non-contributory pension due to means testing. [51472/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Employment)

I propose to take Questions Nos. 273 and 274 together.

According to the records of my Department, 12,003 applicants for state pension (contributory) have been disallowed because they did not satisfy the minimum paid contribution requirement of 520. Of these, 6,085 applicants have 260 or more contributions, but less than 520.

The Department's records indicate that 331 applicants disallowed state pension (contributory) since 2012 were disallowed state pension (non-contributory), as their weekly means exceeded the statutory limit. Of these, 192 applicants have 260 or more contributions but less than 520.

In April 2012, the number of paid contributions required to qualify for state pension (contributory) increased from 260 to 520. The change, which took effect in 2012, was signalled well in advance. In 1993,”Developing the National Pension System - Final Report of the National Pensions Board” was published, and it recommended that the number of paid contributions required to qualify for a contributory pension should be increased to 520 contributions, in recognition of the expansion of PRSI coverage over the decades.

The necessary legislation to effect this recommendation was contained in Section 12 of the Social Welfare Act 1997, which provided for the implementation of the change in two stages, with the paid contribution requirement being standardised at 260 from 2002 (5 years after its introduction in law), and rising to 520 from April 2012 (15 years after its introduction in law). It is reasonable to require people who seek a contributory pension to have made at least 10 years paid contributions into the Social Insurance Fund, which finances contributory pensions, over 50 years of working age life.

Those who do not satisfy the qualifying conditions for contributory pension, because they have paid few or no contributions into the Social Insurance Fund, may instead qualify for State Pension (non-contributory). This is a means-tested payment (based on their share of household means), with the maximum payment set at 95% of the state pension (contributory) rate.

The Government plans to put in place a new Total Contributions Approach for all new pensioners from 2020. Under a “Total Contributions Approach”, a set total of social insurance contributions paid and credited will be required to qualify for a maximum rate state pension (contributory) and people with less than this set total will receive a pro-rata entitlement. This approach was subject to a recent public consultation. The analysis of that consultation is almost finalised and when complete, will help inform a proposal to go to Government on the future total contributions approach for new pensioners from 2020.

I hope this clarifies the matter for the Deputy.