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Don’t overlook Paying your yearly contributions towards your future “Old Age Contributory State Pension”
by Patrick Kearney
 

While it may be a number of years down the road, you should not overlook the value of paying your yearly contributions to ensure that you qualify for your Old Age Contributory State Pension.

The State Pension (Contributory) is paid to people from the age of 66 who have enough Irish social insurance contributions. It is not means-tested and you can have other income and still get a State Pension (Contributory). This pension is taxable but you are unlikely to pay tax if it is your only income.

To qualify for a State Pension (Contributory) you must be aged 66 or over and have enough Class A, E, F,G, H, N or S social insurance contributions.

You need to:

  1. Have paid social insurance contributions before a certain age
  2. Have a certain number of social insurance contributions paid and
  3. Have a certain average number over the years since you first started to pay

1. Paid insurance before a certain age

You must have started to pay social insurance before the age of 56. (The age limit is higher for people born before 1922).

2. Number of paid contributions

If you reach pension age on or after April 6 2012, you need to have 520 paid contributions (10 years paid contributions). In this case, not more than 260 of the 520 contributions may be voluntary contributions.

However, if you were a voluntary contributor on or before April 6 1997 and you have a yearly average of 20 contributions, you may meet the requirement if you have a total of 520 contributions (of which only 156 need to be compulsory paid contributions).

If you reached pension age on or after 6 April 2002, you needed to have 260 paid contributions (effectively 5 years contributions but they need not be consecutive).

If you reached pension age before 6 April 2002, you needed 156 qualifying paid contributions (a total of 3 years but they did not have to be consecutive).

3. Average number of contributions per year

You must meet the average contribution. This is probably the most complex aspect of qualifying for a State Pension (Contributory).

Normal average rule

The normal average rule states that you must have a yearly average of at least 10 appropriate contributions paid or credited from the year you first entered insurance or from 1953, whichever is later to the end of the tax year before you reach pension age (66). An average of 10 entitles you to a minimum pension; you need an average of 48 to get the maximum pension.

Alternative average rule

This alternative average only applies to people who reach pension age on or after 6 April 1992.

It requires that you have an average of 48 Class A, E, F, G, H, N or S contributions (paid or credited) for each contribution year from the 1979/80 tax year to the end of the tax year before you reach pension age (66). This average would entitle you to the maximum pension. There is no provision for a reduced pension when this alternative average is used.

So, if you reach the age of 66 on or after April 6 1992, your average will be looked at in two ways - the usual average will be assessed and the alternative average will be assessed. Most employed or formerly employed people will be able to meet the alternative average. The alternative average will probably be looked at first because it is easier to assess. If you do not have an average of 48 contributions from 1979 then the normal method of assessing the average will be looked at and you may get a reduced pension (if you do not meet the alternative average, it is virtually impossible for you to have an average of 48 using the normal average rule).

Working in the home and State pensions

In 1994, regulations were made that should make it easier for people who take some time off work to care for family members to qualify for pensions. The Homemakers' Scheme is for people who have been carers since or after 1994. It does not affect people who were carers before April 1994 and it is not of much use to those who give up work permanently. It is of greatest importance for those who work outside the home for a number of years, then spend a number of years as carers and then return to the workforce. It applies equally to women and men.

From 5 April 1994, any contribution year spent as a homemaker may be disregarded in the calculation of the yearly average up to a maximum of 20 years. So, the fact that you do not have any contributions in those years will not affect your entitlement to a pension

Rates

State Pension (Contributory) rates for people who qualify for pensions from 1 September 2012

Yearly average PRSI contributions

Personal rate per week, €

Increase for a qualified adult* (under 66), €

Increase for a qualified adult* (over 66), €

48 or over

230.30

153.50

206.30

40-47

225.80

146.00

196.00

30-39

207.00

139.00

186.00

20-29

196.00

130.00

175.00

15-19

150.00

100.00

134.00

10-14

92.00

61.00

83.00

*Increases for qualified adults are means-tested payments (see Adult dependants below).

From 1 September 2012, the rate band 20-47 was replaced by the bands 20-29, 30-39 and 40-47. You can read FAQs about these changes on www.welfare.ie.

State Pension (Contributory) rates for people who qualified for pensions before 1 September 2012

Yearly average PRSI contributions

Personal rate per week, €

Increase for a qualified adult (under 66), €

Increase for a qualified adult (aged 66 and over), €

48 or over

230.30

153.50

206.30

20 - 47

225.80

153.50

206.30

15 - 19

172.70

115.10*

154.70*

10 - 14

115.20

76.80*

103.20*

*Qualified adult rates apply to claims made from 6 April 2001.

Extra benefits

You are automatically paid an extra allowance of €10 per week when you reach 80 years of age. This increase is not paid to qualified adults.

The Living Alone Increase may be payable to people who live completely alone. You may also be eligible for other benefits. Find out more about medical cards, the Household Benefits Package and Fuel Allowance.

Adult dependant

You can get an increase in your payment for an adult dependant (called a qualified adult).

Your income is not taken into account in the assessment for a Increase for a Qualified Adult. Any income your adult dependant has from employment, self-employment, savings, investments and capital (for example, any property except your own home) is taken into account. If you have joint savings or investments with your spouse, civil partner or cohabitant only half is taken into account.

If you are getting a State Pension (Contributory) the Increase for a Qualified Adult is automatically paid directly to your adult dependant. This only applies to applications for State pensions received by the Department on or after 27 September 2007.

Child dependants

You can also get an increase in your payment for child dependants (known as qualified children). Since 6 July 2012 you can no longer claim an Increase for a Qualified Child (IQC) with your State Pension (Contributory) if your spouse, civil partner or cohabitant has an income of over €400 a week. You get a half-rate IQC if your spouse, civil partner or cohabitant earns between €310 and €400 a week. This only applies to claims made after 6 July 2012.

How to apply

You can check your social insurance record with the PRSI Central Records section in the Department of Social Protection. To do this, you need your PPS (Personal Public Service) Number. If you are over 60, the Pension Services Office also has a 'Pensions Forecast Pack', this combined with a copy of your social insurance record can give you information about the social insurance contributions you may still need to make to qualify for a State Pension (Contributory).

You can get a State Pension (Contributory) form (pdf) from your local post office and local offices of the Department of Social Protection.

You should apply 3 months before the age of 66. However, if you have paid social insurance contributions in more than one country, you should apply 6 months before reaching 66.

From April 2012 late claims for contributory pensions can be backdated for a maximum of 6 months. This applies to State Pension (Contributory and Transition) and Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension. Read more in the citizens information document about late claims.

Where to apply

Questions about your eligibility for a State Pension (Contributory) should be addressed to your local social welfare office or:

Department of Social Protection

Social Welfare Services
College Road
Sligo
Ireland

Opening Hours: This office does not offer a service to personal callers. All queries must be made using the online enquiry form, by telephone or in writing.
Tel:(071) 915 7100 Locall:1890 500 000 Homepage: http://www.welfare.ie/

You can email the State Pension (Contributory) section using the secure State Pension (Contributory) enquiry form. If you wish to talk to someone face-to-face about your pension entitlements, you can visit your local Citizens Information centre, social welfare local office or Intreo centre.

Any questions about your social insurance record should be addressed to:

PRSI Records

Department of Social Protection
McCarter's Road
Ardaravan
Buncrana
Donegal
Ireland

Tel:(01) 471 5898 Locall:1890 690 690 Homepage: http://www.welfare.ie/

Changes to the State Pension (Contributory)

The Social Welfare and Pensions Act 2011 made a number of changes to the qualifying age for State pensions. The qualifying age will rise to 67 in 2021 and 68 in 2028. So:

  • If you were born on or after 1 January 1955 the minimum qualifying State pension age will be 67.
  • If you were born on or after 1 January 1961 the minimum qualifying State pension age will be 68.

Further changes are proposed to the current system in 2020.

Should you have any queries or require further information please do not hesitate to contact me.

“Much of the information herein is reproduced from the Citizens Information Website in accordance with the Regulations on the Re-use of Public Sector information, and in particular we acknowledge here its source, and Citizens Information Board copyright. Every care has been taken to reproduce the information accurately”.





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