Thursday, 11 July 2019

Ceisteanna (909)

Martin Heydon


909. Deputy Martin Heydon asked the Minister for Employment Affairs and Social Protection if a person (details supplied) in receipt of a reduced contributory pension would be entitled to an increased payment if homecaring credits could be taken into account under the averaging calculation of pension rather than the total contributions calculation used as part of the reviews; and if she will make a statement on the matter. [31021/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Employment)

For those people who reached state pension age since September 2012, two different methods of calculating their entitlement to a contributory state pension are used. There are several differing elements involved in each calculating method. For example, the Yearly Average (YA) method does not include a limit on credited contributions. The interim Total Contributions Approach (TCA), as launched in January 2018, does have a limit on credits but allows up to 20 years HomeCaring periods be added to paid contributions to increase a person’s rate. The YA method rewards those with a shorter timespan between first and last social insurance contributions while TCA looks at a person’s aggregated contributions without regard for timespan. Under YA, there is no maximum number of contributions required, while under TCA 40 years is the maximum required.

The elements which make up each method are set out in law. Accordingly, it is not possible to choose those elements from either method that may prove most advantageous to an applicant. To allow pensioners choose the elements in how their pension is calculated would likely incur very significant costs which could further undermine the sustainability of the State Pension. My department will spend over €8 billion on pensions in 2019 and this figure is already increasing year on year to the tune of c.€1 billion every five years based on demographic changes alone. Instead, pensioners are paid using whichever of the two methods of calculation is most beneficial to them.

The person in question applied for a pension and was assessed with having a yearly average of 21 based on 922 reckonable paid contributions and 107 reckonable credited contributions over 48 years. This places the person into the 20-29 rate band which equates to a payment rate equal to 85% of the maximum rate pension.

A review took place on the person concerned as part of the on-going rate review project. The review resulted in a payment rate equal to 82.02% of the maximum rate pension based on 922 reckonable paid contributions combined with 677 HomeCaring periods and 107 reckonable credits.

As the person is already in receipt of 85% of the maximum rate of pension, it is more financially beneficial for them to remain on their existing payment. A review outcome letter has issued informing the person concerned that their existing rate of payment will continue unchanged.

I hope this clarifies the matter for the Deputy.