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State Pensions

Dáil Éireann Debate, Thursday - 30 June 2022

Thursday, 30 June 2022

Ceisteanna (229)

Bernard Durkan

Ceist:

229. Deputy Bernard J. Durkan asked the Minister for Social Protection the total amount received by her Department by way of eligible State pension contributions in which the level was insufficient to facilitate the awarding of a pension; if such funds can either be returned or paid by way of reduced pension; and if she will make a statement on the matter. [35221/22]

Amharc ar fhreagra

Freagraí scríofa

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.

A person is required to have a minimum of 520 paid reckonable PRSI contributions in order to qualify for the State Pension (Contributory). The actuarial value of the State Pension is circa €380,000. The estimate does not include the value of the over 80 allowance, Household Benefits Package, Living Alone Allowance, Free Travel, Survivors Pension on death (assuming qualifying criteria are met by either recipient or spouse) and means-tested payments such as Qualified Adult or Fuel Allowance. It is, therefore, reasonable to require people claiming a contributory pension to have made at least 10 years of reckonable paid contributions over the term of their working life.

There are two basic principles which underpin the Irish social insurance system.

Firstly, there is the contributory principle. Under this principle there is a direct link between the PRSI contributions that a person has paid and entitlement to a varying range of benefits and pensions. Where a person has sufficient PRSI contributions, then benefits and pensions may be paid as of right, where a particular contingency arises and without a means test.

Secondly, there is the solidarity principle. Under this principle the benefits and pensions that are paid are not directly related to the amount of PRSI contributions paid by insured persons. PRSI contribution income is instead redistributed to support contributors who are more vulnerable. In this regard, it should be noted that some PRSI contributors do not experience all of the contingencies during their life. For example, one contributor may never require access to Invalidity Pension whereas it may be a crucial support for another.

Where a person enters the social insurance system over the age of 56 they will not be able to make sufficient social insurance contributions to be awarded a State Pension (Contributory) on reaching 66 years of age because it has a minimum contribution requirement of 520 contributions (i.e. 10 years). In such cases, a level of social insurance refund may be applicable.

It should be noted that, if a person does not satisfy the conditionality to qualify for State Pension (Contributory), s/he may qualify for the means-tested State Pension (Non-Contributory), the maximum rate of which is over 95% of the maximum rate of the State Pension (Contributory). Alternatively, an Increase for a Qualified Adult (IQA) is paid, generally, where a pensioner has an adult dependent (e.g. a spouse, civil partner or cohabitant who is financially dependent upon him/her), who does not have enough contributions to claim a maximum rate State Pension (Contributory) in his/her own right. The payment rate for the IQA is up to 90% of a full contributory pension. The most advantageous payment for a pensioner will depend upon their individual circumstances.

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.

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