Cork East Fine Gael TD and Minister of State for the Department of Justice & Equality, David Stanton, has welcomed progress on the Government’s review of recipients of the State Pension (Contributory).
The review of the State Pension (Contributory), announced by the Government earlier this year, applies to current pensioners whose rate of entitlement was assessed according to pension rate band changes which were introduced in 2012. The review will provide for an alternative Total Contributions Approach (TCA) re-calculation for contributory pensioners born on or after the 1st September 1946. New Home Caring Periods will also take into account time spent out of the workplace for parenting or caring duties.
The new TCA marks a move away from the old ‘averaging rule’ system whereby a person’s Pay Related Social Insurance (PRSI) contributions were added up and then averaged over the number of years they had been in employment and made PRSI contributions. Under the new calculation method, pension entitlement will be based on the total number of contributions a person has made over their working career only, the maximum length of which, for calculation purposes, will be 40 years.
Welcoming the progress of the review, Minister Stanton said “I understand that the Department of Social Protection will issue letters to all pensioners concerned at the end of October, to explain to them what is happening and how the TCA review will work. This will no doubt be welcomed by all the people affected, many of whom are women who have been disproportionately affected by the 2012 changes if they took time out from the workplace to raise their families.
Minister Stanton continued “It is worth noting that until January 2020 all existing and new State Pension (Contributory) applicants will be assessed under both the old and the new system and will be awarded the pension rate which is more favourable. This means that contributory pensioners will either see their state pension rate remain the same, or it will be increased.
“The Department of Employment Affairs and Social Protection is currently working on legislation to implement the new arrangements as well as a new information technology system to be developed in line with the legislation. Both of these measures are at a very advanced stage. Additional temporary staff have also been recruited which will allow for the review process to commence in the coming weeks.
“It is expected that where increases are awarded, the new amended payments will be made in the first quarter of 2019 with all increased backdated from the end of March 2018, or later where a person has reached their 66th birthday since that date.
“I would like to stress that no pensioner will be worse off as a result of this review. Where a pensioner does not benefit from the measures introduced, they will continue to receive their existing rate of entitlement. However, Minister Regina Doherty has informed me she expects the majority of those who were adversely affected to be positively impacted by the recalculation and moved to a new, higher payment.”