Other Questions. - Pension Provisions.

Wednesday, 4 December 2002

Dáil Eireann Debate
Vol. 558 No. 5

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  70.  Mr. Eamon Ryan  Information on Eamon Ryan  Zoom on Eamon Ryan   asked the Minister for Social and Family Affairs  Information on Mary Coughlan  Zoom on Mary Coughlan   her plans to address the anomaly regarding class D stamps and contributory pensions. [24759/02]

Mary Coughlan: Information on Mary Coughlan  Zoom on Mary Coughlan  Public servants employed after April 1995 pay class A PRSI and are insured for all benefits. Their occupational sick pay and pension arrangements are adjusted to reflect this. Historically, however, many public servants were excluded from full social insurance cover as it was considered they had adequate occupational provision within the terms of their employment to cover sick pay and pensions. This group of permanent and pensionable public servants was insured at class D which gives entitlement to a limited range of benefits, including widow's and widower's (contributory) pension, carer's benefit and bereavement grant.

Manual workers and unestablished workers in the public sector were always insured at class A for all benefits. This meant that on promotion or on reaching the insurable limit, which operated until 1974, a person in this group could move from class A to class D. This change of social insurance class leads to people who worked in the public sector having a mix of full and modified insurance contributions, which can affect their entitlement to a contributory pension at retirement.

A number of measures have been introduced over the years to give more flexibility in the pensions system and thereby allow more people with gaps in their insurance record to qualify. In 1988, a special partial old age contributory pension was introduced for those affected by the insurable limit based on achieving a yearly average of at least five contributions. At the time the standard qualifying conditions required an average of at least 20 contributions.

Subsequently, the Government introduced a range of measures designed to ease the qualifying conditions for pensions so that people with mixed rate or interrupted insurance records could qualify for a pension. These include a reduction in the yearly average required for a standard pension to ten contributions, the introduction of pro-rata pensions for mixed rate insurance cases and special pensions for those with pre-1953 insurance and certain self-employed people. These measures, particularly those relating to the yearly average and pro-rata pensions, have over[1248] taken the improvements made in 1988. Many public servants benefited from these changes.

In introducing improvements in this area I must be conscious of the social insurance principle which requires that a person applying for pension has a reasonable attachment to the social insurance system, both in terms of the nature and number of contributions they have paid. With this in mind, I am satisfied that there are adequate arrangements in place to ensure that people with reduced or mixed rate insurance records can receive a pension.

Mr. Boyle: Information on Dan Boyle  Zoom on Dan Boyle  Now that the Minister's Department has dealt with the anomaly of the pre-1953 contributions, does she accept that class D stamps represent the major difficulty for people seeking entitlement to contributory old-age pension for people who worked, not only in the Civil Service, as she indicated in her answer, but also those who worked in semi-State bodies? Previously semi-State bodies contributed at the higher percentage of the paid workforce. Some State bodies have ceased to exist and because of that she needs to give particular attention to this anomaly.

Has the Minister been made aware of the budget submission of the Irish Senior Citizens' Parliament, which suggested an equivalence between four class D stamps and one class A stamp as a measure that might get over this anomaly? Is that something which she would consider positively in bringing about such a reform?

Mary Coughlan: Information on Mary Coughlan  Zoom on Mary Coughlan  I am aware of the submission regarding the four to one equivalence. The term “public servants” includes those in the semi-State sector. Full PRSI contributions are available to new entrants since 1995, so the anomaly no longer exists for them. Many people have been facilitated in the context of the pro-rata pensions, the mixed rate insurance contributions and the reduction in the contribution eligibility and also the pre-1953 ruling.

I have looked at this issue but do not expect to be in a position to change class D stamps at present. Almost 27,300 people have been facilitated in the context of the overall changes. The new arrangements in place also facilitate many more people. The anomaly has been rectified since 1995.

Mr. P. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  Can the Minister confirm that the class D contributions are paid into the social insurance fund? Does she think it fair that those who are employed by semi-State companies are paying this additional PRSI with no benefit accruing? It is, in effect, an additional tax for being employed in this sector.

Mary Coughlan: Information on Mary Coughlan  Zoom on Mary Coughlan  The Deputy should know all about it as he falls into the same category. We pay a reduced rate and therefore we do not gain access to the other schemes which are available.

Mr. P. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  We pay 3%.

[1249]Mary Coughlan: Information on Mary Coughlan  Zoom on Mary Coughlan  It has been changed since 1995, but only for new entrants. Most others have been facilitated in the reduction of the contribution schemes. The Deputy will appreciate that one has to make an equal contribution and have some attachment to the social insurance scheme. I will look at it but I cannot say I will be in a position to facilitate those who pay class D, given that it has now been reduced to five contributions.

Mr. P. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  Will the Minister confirm that it goes into the social insurance fund?

Mary Coughlan: Information on Mary Coughlan  Zoom on Mary Coughlan  I did not steal it so I am sure it is still there. I am nearly sure that PRSI goes into the social insurance fund.

Mr. P. McGrath: Information on Paul McGrath  Zoom on Paul McGrath  Will the Minister check it and let me know?

Mary Coughlan: Information on Mary Coughlan  Zoom on Mary Coughlan  I will.

Mr. Penrose: Information on Willie Penrose  Zoom on Willie Penrose  Deputy McGrath must be getting ready to retire.


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