Statutory schemes of social security (Directive 79/7)

• Author: Frances Meenan
• Pages: 60-62

60

7 Statutory schemes of social security (Directive 79/7)

7.1 General (legal) context

7.1.1 Surveys and reports on the practical difficulties linked to statutory schemes of social

security (Directive 79/7)

The major practical difficulty with the social welfare/protection legislat ion is its

complexity.218

7.1.2 Other relevant issues

The social welfare system provides for care credits for the calculation of a person’s

entitlements in relation to periods when th e worker was taking care of his or he r children

or ill family members, for example. Credits are also available for periods on maternity and

various other forms of statutory leave. The Home Makers Scheme came into operation on

6 April 1994. During the economic crisis in 2012, there were certain changes to the Scheme

resulting in reduced pensions. The persons affected by such reduction were mainly women.

The Minister for Employment Affairs and Social Protection announced219 on 23 January

2018 that there will be significant improvements to pension outcomes to homemakers and

carers who are a ssessed under the rate band changes220 introduced in September 2012

and the current yearly averaging system. The new system is available to all peopl e who

reached pension age after 1 September 2012 when the impugned rate bands became

effective. A new Total Contribution Approach will be available to pensioners affected by

the 2012 changes and will include up to 20 years of a new H ome Caring credit. There will

be Home Caring Periods which can be added to a pers on’s pension in order to increase it.

The maximum State pension is EUR 243 gross per week. A ‘Home Caring Period’ is the

name for a period of time when a person was not in employment or signing on for credits

because the person was providing for full -time care for a child or children un der 12 years

of age, a child or children over 12 years o f age who needed an increased level of ca re, or

an adult who needed an increased level of care. These benefits are only for persons born

after 1 September 1946. A Home Caring Period may be awarded for each week not already

covered by a paid or credited social insurance contribution when caring for a child or an ill

person. As stated above, the Home Makers Scheme came into operation on 6 Ap ril 1994

(i.e. which is a disregard for any periods spent as a Homemaker since that date ) and

applies to the yearly average method of calculating the State Contributory Pension, whilst

the Home Caring Periods scheme applies to anybody who was born on or after 1 September

1946 and spent time out of the workf orce, for use under the new State P ension

Contributory Aggregated Calculation Method of pension calculation. The benefit of the new

scheme is that many women remained at home looking after their children and may have

had larger families and/or l ooked after a member of the family who was ill or an elde rly

member of the family (e.g. a parent or parent in law). Such persons may have carried out

this childcare or elder care for y ears without the benefit of the Home Maker Schem e. The

Minister states that this new arrangement will significantly benefit many people and in

particular women. This new system will ensure that the totality of a person’s social

insurance contributions, as opposed to the timing of them, will determine the final pension

outcome. These new arrangements will come into effect from 30 March 2018 so pensioners

with a pension calculated under the 2012 system can have their pension calculated under

the new system to see if they get a higher rate of pension. The first payments will be made

in quarter 1 2019, backdated to 30 March 2018. The Total Contribution Approach will

replace the ‘yearly average’ approach for all new contributory state pensions applicants

from around 2020 onwards.221

218 Social Welfare (Consolidation) Act 2005 (as amended).

219

http://www.welfare.ie/en/Pages/Pension-Calculation-Changes-Announcement-January-2018.aspx.

220 I.e. new formulae which resulted in reduced pensions.

221

http://www.welfare.ie/en/Pages/HomeCaring-Periods.aspx and s. 9 of the Social Welfare, Pensions and Civil

Registration Act 2018. http://www.welfare.ie/en/pressoffice/Pages/pr260419.aspx.