Social Protection | Cost of introducing prorate pensions for those who have made insufficient amounts of pension contributions to qualify
To ask the Minister for Social Protection the possible cost of introducing prorate pensions for those who have made pension contributions but an insufficient amount to qualify for a pension in a single year; and if she will make a statement on the matter.
There are a number of payments and pensions paid by my Department to people over State Pension Age. One of these is the State Pension Contributory (SPC). This scheme’s entry criteria require applicants to have at least 520 social insurance contributions paid from either employment or self-employment. For those who have paid the required contributions, these will be used in the calculation of their entitlements.
As the actuarial value of the State Pension is currently estimated at approximately €380,000, I believe 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, before qualifying for a payment.
My Department does not have complete data in respect of the information requested by the Deputy, e.g., the Department does not have records on those aged 66 or over who do not apply for a contributory pension, and so it is not possible to provide the costs sought.
Where a person reaches State Pension age and does not satisfy the conditions to qualify for a SPC or qualifies for less than the maximum rate, they may instead qualify for one of the following:
- The means-tested State Pension (Non-Contributory) (SPNC) which is a means-tested payment (based on their share of household means) with a maximum payment of 95% of the SPC; or
- An increase for a qualified adult (based on their own means), amounting up to 90% of a full rate SPC pension where their spouse has a contributory pension; or
- Where their spouse/civil partner is deceased, a widow’s/widower’s/civil partner’s contributory pension, which they may claim either based on their spouse’s or their own social insurance record. The qualifying conditions for this require fewer contributions paid (260) than the SPC and the current maximum personal rate for those aged 66 or over is €265.30, i.e. the same as the maximum rate of the SPC, with allowances (notably the Living Alone Allowance) payable where applicable.
Where contributors enter insurable employment, either as employees or self-employed, after they have attained the age of 56 and have no entitlement to the SPC or SPNC, then the pension element of the contributions paid by both employed and self-employed contributors may be refunded.
In September, I announced a series of landmark reforms to the State Pension system in response to the recommendations from the Pensions Commission. The set of measures represent the biggest ever structural reform of the Irish State Pension system.
Among the measures agreed is the introduction of a system to allow people to choose to defer access to the State Pension (Contributory) up to age 70 and receive a cost neutral actuarial increase in their State Pension payment. This system also provides for a person to continue to pay social insurance contributions past State Pension age to improve their social insurance record for State Pension (Contributory) purposes. These PRSI contributions may enable individuals without a full contribution record (and who have deferred access to the State Pension) to become entitled to the State Pension (Contributory), or increase the pension rate of payment, as a consequence of the additional paid contributions. People will still be able to retire at 66 and draw-down their pension in the same way as they can today. These measures will become effective from January 2024.
I hope this clarifies the matter for the Deputy.
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