State Pensions

Qualified Pay Related Social Insurance (PRSI) contributors are entitled to a contributory retirement pension (if they have retired by age 66) or an old age pension (payable from age 66).  A surviving spouse's pension is payable if a qualified contributor dies, either before or after retirement.  Pensions consist of a personal entitlement and dependants' allowances (allowances for adult dependants are means tested).

 

Means tested non-contributory pensions are not relevant to most people working in pensionable employment.

The following are the State Pension payment rates, applying to PRSI contributors, with effect from January 1st 2007.

RATES OF PAYMENT-Maximum Weekly Rates

 

Retirement/Old Age (Contributory) Pension

   

Age 66 up to age 80

 

209.30

- aged 80 and over

 

219.30

The State benefits are generally taken account of, in the design of occupational pension schemes. So the total benefit that is provided usually includes the payment of the State Pension. The process of taking account of State Pensions is known as 'integration'.

Generally employee contributions are lower when the State Pension is integrated with a company scheme.

The following is from the State Oasis Public Information Service

Retired

Being "Retired" means that you must not be in insurable employment or self-employment. That means that if you have earnings, they must be less than €100 a week from employment or €5,200 a year from self-employment. If you have an income from savings or investments, you could be liable for self-employed PRSI but that would not debar you from a Retirement Pension if you are not actually engaged in self-employment.

This condition ends when you reach the age of 66.  At that stage, you may have earnings from any source without affecting your entitlement to Retirement Pension.

Social Insurance Contributions required

You need to

    • have paid social insurance contributions before a certain age
  • have a certain number of social insurance contributions paid, and
  • have a certain average number over the years since you first started to pay.

Paid insurance before a certain age

You must have first started to pay social insurance contributions before the age of 55.

Number of paid contributions

If you reach pension age before April 6th 2002, you must have 156 qualifying paid contributions (a total of 3 years but they do not have to be consecutive). This means that you must have actually paid contributions at the appropriate rate (i.e., full stamp prior to 1979 or Class A,E,F,G,H,N since then).

If you reach pension age on or after April 6th 2002, you will need to have 260 paid contributions - effectively 5 years contributions but they need not be consecutive.

If you reach pension age on or after April 6th 2012, you will need to have 520 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 6th 1997, you may meet the requirement if you have a total of 520 contributions but only 156 need to be compulsory paid contributions.

In some cases, contributions paid before 1953 into the then National Insurance scheme may be taken into account in order to satisfy the requirement that you have 156 paid contributions. In fact, each 2 such contributions are counted as 3. But, if they are taken into account, the average must be measured from 1953.

Average contributions per year

You must meet the average condition. This is probably the most complex aspect of qualifying for pensions and it is the one that gives rise to the greatest problems and anomalies.

Normal "average" rule

The normal average rule states that you must have a yearly average of at least 24 appropriate contributions paid or credited from the year you first entered insurance or from 1953, whichever is later.  An average of 24 entitles you to a minimum pension; you need an average of 48 to get the full 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 contributions (paid or credited) per contribution year from April 1979 to the April before your 65th birthday.  This average would entitle you to a full pension.  There is no provision for a reduced pension when this alternative average is used.

So, if you reach pension age, i.e. 66 on or after April 6th 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 date of April 1979 has been chosen because that was the time that pay related social insurance was introduced. The alternative average will probably be looked at first because it is easier to assess. If you do not have an average of 48 from 1979 then the usual 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 on the usual method).

Contributions paid in another EU Member State

If you have paid social insurance contributions in another EU member state, these can be employed to help you qualify for a retirement pension.

 

The above page figures are correct as at 01/01/2007

Contact Details

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Portmarnock,
Co. Dublin,
Ireland
 
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