CHIEF EXECUTIVE SPEECH
‘THE SELF-EMPLOYED AND THE OLD AGE CONTRIBUTORY PENSION’
In 1988 legislation was introduced making it compulsory for the first time
for the self-employed to contribute to the social insurance scheme.
Certain benefits were payable to them under the scheme. Originally they
were entitled, provided specified conditions were met, to:
 a widow’s and widower’s contributory pension,
 an orphan’s contributory allowance, and
 an old age contributory pension.
From 1998, the benefits were extended to include:
 a maternity benefit,
 an adoptive benefit, and
 a bereavement grant.
By far the greatest percentage of an individual’s contributions, over 50%,
went towards the old age contributory pension. In fact, one of the main
purposes of the 1988 legislation was to bring the self-employed within
the system of social insurance and, in particular, to address an inadequacy
in the pension cover of the self-employed. This was made clear by the
then Minister for Social Welfare during the passage of the legislation
through the Dáil. He explained the rationale for the legislation in the
following terms:
Up to now the [self-employed] were excluded from compulsory
social insurance and left to make their own pension arrangements.
Many now rely on means-tested social assistance. Up to 70 per
cent of formerly self-employed persons qualified for social
assistance pensions to which they had not directly contributed.
The result of this policy was inadequate pension cover for a large
segment of the population and inequity in the financing of
social welfare generally.
The downside of the legislation for some contributors was that it was not
possible for them, by virtue of their age, to qualify for an old age
contributory pension. One of the qualifying conditions was that a person
had to have entered into insurance before the age of 56 to obtain this
benefit. Those over the age of 56 at the time therefore had to contribute
towards this benefit without the possibility of ever receiving it.
Representations were made to the Minister about their situation, including
the possibility of allowing them to continue paying contributions beyond
the cut-off age of 66 until they had 10 years of contributions completed.
The possibility was excluded by the Minister on the ground of cost. No
provision was made for a pro rata pension calculated on the basis of a
percentage of the number of years’ contributions.
However, the Government does appear to some extent to have been
responsive to the sense of injustice felt by those contributors excluded
from receipt of the old age contributory pension. In 1999, further
legislation was introduced which would afford a special half-rate pension
to self-employed persons who had made at least 5 years’ contributions to
the social insurance fund before reaching the age of 66. The legislation
applied to those who, on the relevant date in 1988, had attained the age of
56 but had not attained the age of 62. No provision was made for a true
pro rata pension; and the legislation left a relatively small cohort of
contributors, those aged over 61 in 1988, without the possibility of
receiving any old age contributory pension.
The Gallaghers, a married couple, approached the Commission and
requested it to conduct an enquiry into this matter. They ran a small
business, and both were over the age of 56 when they were required by
law in 1988 to pay PRSI. Mr Gallagher was 61, and Mrs Gallagher was
57. When the 1999 legislation was enacted, both fell within the relevant
age bracket in order to qualify for a half-rate old age contributory
pension, being between 56 and 62 years of age in 1988; but Mr Gallagher
could not satisfy the condition of 5 years’ contributions, since he was 61
years and a few months old in 1988 and the cut-off age for contributions
was 66. Both retired in the 1990s, before the 1999 legislation was passed.
On learning that they did not qualify for an old age contributory pension,
they offered to aggregate their contributions so that Mr Gallagher could
receive a half-rate pension. They also offered to make up the few
months’ shortfall in Mr Gallagher’s contributions so that he might qualify
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for this pension. The Department refused their offers and pointed out that
there was no legal basis on which they could accede to such requests.
The Commission is empowered to conduct an enquiry into any relevant
matter at the request of any person who considers the conducting of such
an enquiry to be necessary or expedient for the performance of a number
of its other functions. Among these other functions are:
 the keeping under review of the adequacy and effectiveness of law
and practice in the State relating to the protection of human rights;
and
 the making of such recommendations to the Government as the
Commission deems appropriate in order to strengthen, protect and
uphold human rights in the State.
After considering the Gallaghers’ request, the Commission agreed with
them that it would be expedient for the performance of these particular
functions to conduct an enquiry into the matters raised by them and
decided to do so.
Having examined the relevant law and its impact on the Gallaghers and
on persons in a like situation, the Commission then considered the
application of a number of international human rights standards to these
matters. The standards which it identified and applied as relevant are:
 the right to adequate social security, including social insurance;
 the right to the peaceful enjoyment of one’s possessions without
arbitrary interference; and
 the right to equality before the law and non-discrimination in the
enjoyment of rights.
It is the first of these standards, the right to adequate social insurance,
which appears most clearly not to have been respected. The European
Code of Social Security, which has been binding on Ireland since 1972,
contains certain guarantees in respect of the payment of old age benefit.
Among other guarantees, it provides that where a benefit is conditional
upon a minimum period of contributions, a reduced benefit shall be
payable under prescribed conditions to an insured person who, by reason
only of their advanced age when the provisions concerned came into
force, has not satisfied the condition.
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The minimum period of contributions required under the 1988 legislation
to qualify for an old-age contributory pension when Mr Gallagher
reached retirement age was 3 years. Mr Gallagher satisfied this
condition. However, as one of the other conditions for payment of the
pension was entry into insurance before the age of 56, he could not satisfy
this condition by reason of his advanced age when the legislation entered
into force. The introduction of the half-rate pension in 1999 did not
afford him a reduced benefit. One of the conditions under the 1999
legislation was a minimum of 5 years’ contributions, and he could not
meet this condition, again by reason of his advanced age in 1988. It
therefore appears that Mr Gallagher and others in a similar position to
him are entitled to a reduced old age pension.
In contrast, Mrs Gallagher, while she did not enter into insurance before
the age of 56, would have been eligible for the half-rate pension for the
self-employed had she continued to pay the required contributions up to
retirement, but she did not do so.
There is also doubt as to whether the other two relevant international
human rights standards, the right to the peaceful enjoyment of one’s
possessions and the right to equality before the law and nondiscrimination in the enjoyment of rights, were fully met.
The Commission is conscious that it is not an adjudicatory body. It does
not decide on the merits of alleged violations of human rights, nor does it
have the competence to afford a remedy to persons who believe that their
human rights have been violated.
Nevertheless, it may make
recommendations to the Government in order to strengthen, protect and
uphold human rights in the State. On the basis of this enquiry, the
Commission accordingly makes the following recommendations to the
Government:
1.
The relevance of international human rights standards should be
closely examined in the formulation of public policy and legislative
proposals in the field of social security. While this is important in
relation to all relevant international human rights standards, it is of
particular importance where the relevant international agreement,
as in the case of the European Code of Social Security, is not
enforceable in Irish law.
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2.
A reduced benefit should be paid to those self-employed persons
who contributed to the social insurance scheme but did not qualify
for an old age contributory pension because they did not satisfy a
prescribed condition for the payment of the pension by reason only
of their advanced age when the relevant legislative provisions
entered into force. In this regard, the Government may wish to
consider amending the relevant legislation to provide for a pro rata
old age contributory pension for the self-employed, instead of
requiring that a self-employed contributor have entered insurance
before the age of 56.
3.
Every effort should be made by the authorities to trace these
persons so that they are aware of the possibility of receiving a
reduced benefit.
4.
Mr Gallagher should be paid a half-rate pension, given that he was
only a few months short in contributions from qualifying for this
pension and would have qualified for it had it been legally possible
to credit him with his wife’s contributions.
Finally, I would like to acknowledge the sterling work carried out by the
Commission’s Senior Caseworker, Des Hogan, on the enquiry and this
report as well as the assistance provided on specific matters by the
Assistant Caseworker, Gerry Finn, and the Administrator (Finance and
Human Resources), David Carolan. I would also like to commend the
Department of Social and Family Affairs for its exemplary co-operation
with the Commission in the conduct of this enquiry. All public bodies,
not only the Human Rights Commission, should go about their business
in a way which is respectful of the human rights of all persons in the
State.
Thank you for your attention.
Alpha Connelly
Chief Executive
Human Rights Commission
11 April 2007
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