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State Pension (Contributory)

Dáil Éireann Debate, Wednesday - 30 September 2020

Wednesday, 30 September 2020

Ceisteanna (171)

Brendan Griffin

Ceist:

171. Deputy Brendan Griffin asked the Minister for Social Protection if further changes will be made to the contributory pension scheme to cover farm families that have been negatively impacted under existing criteria; if so, the estimated cost for the changes; and if she will make a statement on the matter. [27613/20]

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Freagraí scríofa

The Farm Assist scheme was introduced in 1999 to provide income support for low income farmers.  It replaced the former Smallholders’ Unemployment Assistance payment.  In line with the then existing arrangements for Unemployment Assistance (including Smallholders' Unemployment Assistance) and Pre-retirement Allowance, the non-welfare income of Farm Assist recipients was exempt from the payment of Class S PRSI for self-employed workers.

Recipients of Farm Assist who had previously paid Class S social insurance contributions had the option of paying voluntary contributions to maintain their social insurance record, provided they satisfied the qualifying conditions to do so.  Since 1st January 2007, the exemption from Class S PRSI has been removed and those self-employed persons receiving Jobseeker’s Allowance or Farm Assist are subject to Class S PRSI as self-employed contributors on their self-employed income, provided their annual income is €5,000 or more.  Any self-employed person, including farmers, with an annual income less than €5,000 can pay voluntary contributions to maintain their social insurance record for pensions purposes, once qualified to do so.

The State Pension (Contributory) is a PRSI-based pension, financed by contributions made by current workers and their employers, and paid to pensioners, at a rate based upon their PRSI record when working.  Those with few or no PRSI contributions paid over the years may alternatively qualify for the State Pension (Non-Contributory), which is a means-tested pension, financed by the Exchequer, and paid at up to 95% of the maximum rate of the State Pension (Contributory).  There are also significant disregards in the household means test for the State Pension (Non-Contributory).  Alternatively, if their spouse has a contributory pension, they may qualify for an increase for a Qualified Adult (based on their own means), amounting to up to 90% of a full rate State Pension (Contributory).  The most advantageous payment for a pensioner will depend upon their individual circumstances.

The Programme for Government “Our Shared Future” commits to the introduction of a Total Contributions Approach (TCA).  This approach, when it is introduced, is intended to be a fairer and more transparent system aligning a person’s contributory pension more closely with the contributions they make.

The Deputy is aware that 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.

I hope this clarifies the matter for the Deputy.

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