Dáil Éireann Debate, Monday - 9 September 2024
1029. Deputy Richard Bruton asked the Minister for Social Protection the start date for the phased introduction of the total contributions regime for pensions; and if it is envisaged that there will be any winners or any losers during the transition. [35836/24]
Amharc ar fhreagraAt present the State Pension (Contributory) can be calculated under two different methods known as the Total Contributions Approach (TCA) and the Yearly Average (YA) approach.
Following on from the Pensions Commission's recommendations, a number of State pension reforms were enacted in the Social Welfare (Miscellaneous Provisions) Act 2023 on the 14th December 2023, which represent the biggest ever structural reform of the Irish State pension system.
Among these reforms, the 2023 Act introduced a ten-year phased transition from the YA method of calculation of State Pension (Contributory) to TCA as the sole method of calculation. TCA is a fairer and more transparent method for calculating the contributory pension and will remove the existing anomalies that exist in the YA calculation method. The ten-year transitional arrangements are to avoid a ‘cliff edge’ effect. The first year of phasing-out will begin in January 2025. From 2034 the YA method of calculation will no longer be used, and all State Pension (Contributory) calculations will be done using the TCA method.
Last year, the Department commissioned the ESRI to do an analysis, considering the impact of the move to TCA for State Pension (Contributory) and its report was published on the 12th of June. The ESRI report shows that 87% of future claimants will see their rate of payment improve or stay the same. In addition, more women will qualify for the maximum pension rate under the TCA (rising from 54% to 75%) due to the removal of anomalies associated with the Yearly Average Method.
