Dáil Éireann Debate, Tuesday - 17 May 2022
105. Deputy Gary Gannon asked the Minister for Social Protection the status of the implementation the full transition to the total contributions approach as recommended by the commission on pensions; and if she will make a statement on the matter. [24646/22]
Amharc ar fhreagraIn 2018, the Government announced the new Interim Total Contributions Approach (also known as the Aggregated Contributions Method) for the calculation of State Pension (Contributory) payments. Since April 2019, all new State Pension (Contributory) applications are assessed under all possible payment rate calculation methods, including the Yearly Average and the Interim Total Contributions Approach, with the most beneficial rate paid to the pensioner.
The Programme for Government “Our Shared Future” includes a commitment to introduce a Total Contributions Approach, aligning a person’s contributory pension more closely with the contributions they make. The Pensions Commission was established in November 2020 to examine the sustainability of the State Pension system and the Social Insurance Fund. The Commission was an independent body comprised of knowledgeable and experienced academics, pension experts, members of civil society and representatives of workers and employers.
The Pensions Commission’s Report was published on 7th October 2021. The report established that the current State Pension system is not sustainable into the future and set out a wide-range of recommendations, including recommending a full transition to the Total Contributions Approach and the abolition of the Yearly Average approach on a phased basis over a ten year period. In terms of the specific design of the Total Contributions Approach, the Commission recommended that the current Interim Total Contributions Approach should become the definitive Total Contributions Approach, i.e., 40 years (2,080) contributions required at State Pension age to qualify for a maximum rate pension. This includes provision for 10 years of PRSI credits and 20 years of HomeCaring periods, but with a cap of 20 years combined PRSI credits and HomeCaring periods.
In the interests both of older people and future generations of older people, the Government is considering the comprehensive and far reaching recommendations in the Pensions Commission’s Report very carefully and holistically. The views of the Joint Committee on Social Protection, Community and Rural Development and the Islands and the Commission on Taxation and Welfare are being considered as part of these deliberations. My officials are examining each of the recommendations and consulting across Government through the Cabinet Committee system. I intend bringing a recommended response and implementation plan to Government in the coming weeks.
It is clear from the Commission’s work that State Pension reform is necessary and it is complex. It would be a strategic risk not to plan and provide for projected demographic changes, not least in terms of income adequacy for older people. The State Pension is the bedrock of the pension system in Ireland. It is extremely effective at ensuring that our pensioners do not experience poverty. This Government is committed to ensuring that this remains the case for current pensioners, those nearing State Pension age and today’s young workers including those who are only starting their careers.
I hope this clarifies the matter for the Deputy.
