The Programme for Government “Our Shared Future” includes a commitment to examine options for a pension solution for carers, the majority of whom are women, particularly those of incapacitated children, in recognition of the enormous value of the work carried out by them. This Government acknowledges the important role that carers play and is fully committed to supporting them in that role. Officials in my Department will be examining the policy options for reforming the state pension system both in this area, and more generally in relation to considerations around a Total Contributions Approach.
The public policy and social issues in relation to funding a sustainable and adequate State pension system are complex. That is why the Programme for Government also commits to the establishment of a Commission on Pensions to examine a range of issues including contributions, calculation methods, sustainability, eligibility and intergenerational fairness. The Terms of Reference for the Commission on Pensions are currently being developed and options for its membership are being considered. I will bring proposals in that regard to Government as soon as possible. Once it has concluded its deliberations, the Commission will report to Government by June of next year.
In the meantime, the current situation is that through the award of credited contributions, normally known as credits, the social insurance system gives significant recognition to time spent caring in terms of qualifying for the State Pension (Contributory). Credits protect social insurance entitlements by bridging gaps in an employee’s social insurance record, where they are not in a position to pay PRSI, such as during periods spent caring. In combination with paid PRSI contributions, credits assist employees in qualifying for short-term schemes and enhance the level of benefit for long-term schemes. Credits are awarded to recipients of Carer’s Allowance (and Carer’s Benefit) where they have an underlying entitlement to credits. Recipients of these payments qualify for credits where they have at least one paid contribution in the previous two years or have had credited contributions in that period. Credits are also awarded to workers who take unpaid Carer’s Leave from work.
In addition, all carers, including those who do not qualify for a payment or for credits, may qualify for the Homemaker scheme. The scheme, which was introduced in and from 1994, is designed to help homemakers and carers qualify for State Pension (Contributory). Years spent caring on a full-time basis are disregarded when calculating the State Pension (Contributory) rate of payment when the rate of pension is calculating using the Yearly Average method.
When the Interim Total Contributions Approach (also known as T12) was introduced in 2018, it included provision for the HomeCaring Periods Scheme which fundamentally changed the entitlement of many who spent time out of the workforce caring for others. It, for the first time, acknowledged home caring periods prior to 1994 and provides for up to 20 years of home caring periods to be considered. Those who have a 40 year record of paid and credited social insurance contributions, subject to a maximum of 20 years of credits / homecaring periods, qualify for a maximum contributory pension where they satisfy the other qualifying conditions for the scheme. Arising from this initiative, the Department reviewed over 94,000 cases resulting in over 38,000 receiving an increased pension payment.
Since April 2019 all new State (Contributory) Pension applications are assessed under all possible rate calculation methods, including the Yearly Average and Interim Total Contributions Approach, with the most beneficial rate paid to the pensioner.
It should be noted if a person does not satisfy those conditions, they may qualify for the means-tested State Pension (Non-Contributory), the maximum rate of which is over 95% that of the maximum rate of the State Pension (Contributory). 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 to up to 90% of a full contributory pension.
I hope this clarifies the matter for the Deputy.