Credited contributions (credits) are social insurance contributions designed to protect the social insurance entitlement record of insured workers who are not in a position to make PRSI contributions.
Credits are awarded in circumstances such as unemployment or illness, and their purpose is to help protect the social insurance entitlements of insured persons during periods when they may not be in a position to pay contributions.
In order to qualify for credits, a person must first have entered insurable employment - he or she must have paid at least one PRSI contribution at Class A, B, C, D, E, H or P.
In general credits can only be awarded where an individual has had a recent attachment to the workforce i.e. within the last 2 years. Self-employed class S contributions are not reckonable toward the award of credits.
Persons in receipt of carers allowance or benefit can qualify for credits where they have previously entered insurable employment and paid at least one PRSI contribution at Class A, B, C, D, E, H or P and where they have had a recent attachment to the workforce.
In combination with paid PRSI contributions, credits can assist employees in qualifying for short-term schemes such as jobseeker’s benefit and enhance the level of benefit for long-term schemes such as the level of payment of State pension contributory (SPC). Credits do not however, in isolation, entitle individuals to qualify for social insurance benefits. It should be noted that only contributions in Classes A, E, F, G, H, N and S are reckonable for State pension purposes.
Individuals who are caring and who do not qualify for carers allowance may qualify for the homemaker’s scheme if their pension is decided by the yearly average method. The homemaker’s scheme is designed to help homemakers and carers qualify for the SPC, and applies to homemaking periods since 6 April 1994. It applies equally to both men and women.
The scheme provides that years spent working in the home while caring on a full-time basis for a child up to 12 years of age or an incapacitated person age 12 or over will be disregarded in calculating a person's yearly average number of contributions for the purposes of determining the rate of their entitlement to SPC. In this way the homemaker’s scheme ensures that an individual’s entitlement to SPC is protected during periods spent caring. As the homemakers scheme allows for years to be disregarded from the calculation, it is not considered a credit.
In January 2018, the Government agreed to a proposal that will allow pensioners affected by the 2012 changes in rate bands to have their pension entitlement calculated by a new “Total Contributions Approach” (TCA) which will include up to 20 years of a new Home Caring period. Unlike the current Homemakers scheme, this allowance will apply to periods both before and after 1994. This approach is expected to significantly benefit many people, particularly women, whose work history includes an extended period of time outside the paid workplace, while raising families or in a caring role. It will make it easier for such pensioners to qualify for a higher rate of the State Pension (contributory). The TCA will ensure that the totality of a person’s social insurance contributions - as opposed to the timing of them - determines a final pension outcome, and it also acknowledges, for the first time, the contribution made by home-carers in the period before 1994.
I hope this clarifies the matter for the Deputy.