Class S PRSI was introduced for the self-employed in 1988. Prior to 1988 the self-employed could maintain their social insurance record by paying Voluntary Contributions, once they had already been an employed contributor and met the qualifying conditions of the Voluntary Contributions scheme. Generally, Voluntary Contributions maintained entitlement to a limited range of pension payments, including the State pension (contributory). Under the Yearly Average system, where a person commenced paying Class S PRSI from 6th April 1988, their average can be calculated from that date.
The Government intends to introduce a Total Contributions Approach (TCA) to establishing the level of entitlement for all new state pension contributory claims from 2020 onwards (TCA2020).
I launched a public consultation on the design of the full TCA to be introduced from 2020 on the 28th of May to which a wide variety of stakeholder groups were invited. A number of workshops were also held on the day to elicit views and feedback. This exercise included materials describing the extension of compulsory PRSI for self-employed in 1988 and sought views on how best to ensure that self-employed are not disadvantaged as a result of this reform.
One of the issues considered in this process was how best to ensure that self-employed contributors are not disadvantaged by the fact that Class S contributions were only introduced in 1988. I have recently been provided with an analysis of the views submitted in the consultation.
Once I have considered this analysis, I intend to bring a proposal to Government setting out the details of how I propose to implement TCA, including, how I intend to address the issue raised by the Deputy.
The Deputy should note that those with insufficient contributions to meet the requirements for a State pension (contributory), may qualify for a means tested State pension (non-contributory), the maximum personal rate for which is €232 (over 95% of the maximum rate of the contributory pension). This rate of payment does not include rent allowance, household benefits or fuel allowance. Alternatively, if their spouse is a State pensioner and they have significant household means, their most beneficial payment may be an Increase for a Qualified Adult, based on their personal means, and amounting up to 90% of a full contributory pension.
I hope this clarifies the matter for the Deputy.