Following the ruling of the Constitutional Court that the existing system requiring workers’ contributions over a minimum number of years to access a contributory state pension violated the principle of equality of access to social welfare benefits, the government has approved a new piece of legislation which sets out the minimum contributions required for a part-time worker to equally benefit from a pension.
The new legislation was approved by the cabinet of Ministers last week following successful talks with social partners and contemplates that part-time workers will not have to pay a minimum of 15 years of contributions in order to qualify for the minimum contributory pension, although the pension they receive will be commensurately lower thereafter.
The minimum period during which the part-time worker needs to have paid contributions is worked out in a complex calculation that is based on a coefficient calculated with reference to the percentage they have worked of a full-time schedule throughout their working life. The number of years so determined is boosted by a multiple of 1.5 to arrive at the pension amount.
The effects of the new law would be to guarantee part-time workers a minimum pension (currently set at €631.30 per month for those retiring at 65) even though they do not meet the minimum threshold of contributions, assuming that they fulfil the other criteria such as having no other sources of income. While part-time workers can earn more than merely the minimum pension, the amount in excess of the minimum that they can receive will be commensurately less than full-time workers. This is a result of the fact that to do so could act as a disincentive for full time workers to make the necessary contributions.
In order to determine the exact amount that a part-time worker is entitled to a complex calculation is carried-out and the final amount is determined by the number of years contribution and the amount contributed as well as the living circumstances of the pensioner – are they living alone or with their (dependent) spouse, do they qualify for an incapacity pension.
Non-contributory and Contributory Pensions
With less than fifteen years’ contribution only a non-contributory old-age pension would be obtainable of €365 per month. This will again vary if the pensioner lives with co-dependents and depends if they have an income. The pension amount rises once fifteen years contributions (or less if a part-time worker) have been made to become a contributory pension and a minimum of €631 per month if living alone or €779 per month if living with a dependent spouse.