Social Protection | To ask the Minister for Social Protection the extent to which applicants with insufficient contributions to qualify for the State pension (contributory) might have their cases reviewed with the possibility of a pro-rata payment
To ask the Minister for Social Protection the extent to which applicants with insufficient contributions to qualify for the State pension (contributory) might have their cases reviewed with the possibility of a pro-rata payment; and if she will make a statement on the matter.
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. A person is required to have a minimum of 520 paid reckonable PRSI contributions in order to qualify for the State Pension (Contributory). As the actuarial value of the State Pension is currently estimated at approximately €380,000, it is reasonable to require people claiming a contributory pension to have made at least 10 years of paid contributions over the term of their working life.
While it was lower in the past when PRSI coverage was less widespread, legislation was introduced in 1997 to increase this threshold to 520 weeks, or 10 years of contributions. A fifteen year period was allowed pass between that legislation being enacted and the threshold being raised to this level, which would have been sufficient for most people to achieve the required contributions.
The social welfare system is primarily a contingency-based system, with entitlement based on a number of defined contingencies such as sickness, unemployment, old age or widowhood.
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.
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). While it is means-tested, there are very significant disregards which are to the benefit of claimants, and a significant majority of such pensioners are paid at the full rate. 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.
As the bedrock of the pension system in Ireland, the State Pension is very 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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