Work on new pension system welcome

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Galway East TD Paul Connaughton has welcomed confirmation that work is underway on a new contributory pension system would be based on total contributions rather than yearly averages.

‘In recent years I have met many women and men in county Galway who are on a reduced contributory pension despite having the necessary total of contributions, because of a gap in their working record. I have raised this anomaly on a number of occasions with Minister Joan Burton. It primarily affects women who took time out of the workforce for caring duties, but I also know that many men throughout the country are affected.

‘Where a woman worked before getting married and then stopped working outside the home for years while children were being reared, such women are now finding that they are not entitled to the full contributory pension because of the gap in their contributions and the way that contributions are calculated.

‘I have also encountered both men and women who worked for a year or two as a teenager before becoming self-employed for many years. Then, in later years they worked as PAYE workers and contributions were made on their behalf. However, because the contributions are averaged from the start date to the end date of their contributions, they are effectively being penalised for working before a long gap in their contributions.

‘This issue affects women disproportionately as many women took time away from the workforce to look after children. These women are now greatly disadvantaged because of their time spent working in the home. The fact that legislation was changed to recognise those who worked in the home since 1994 through the Homemaker’s Scheme makes the case for a change in the legislation even stronger, as it is an acknowledgement that there is an inherent unfairness in the current system.

‘Minister Joan Burton this week in the Dáil, in reply to a question, confirmed that a new approach is to be taken to pensions from 2020 and under this the rate of pension will reflect more closely the number of contributions over a working life rather than the average annual contributions. I believe that such a system would be fairer to women, provided that their years working in the home were recognised, but it needs to be fast-tracked, people cannot afford to wait five years for this change.

‘In recent weeks I have written to the Minister for Social Protection asking that proper data on the number of people affected by this anomaly be collated, so that policy makers can be aware of the full extent of the difficulty that this is causing. I will continue to raise this issue with Minister Burton in coming weeks to seek further clarity on her plans and ensure that any changes to contributory pensions are determined quickly so that people who retire in a decade from now will know as soon as possible what level of contributions they will have to have to access the highest possible contributory pension.’