Contributory Pension calculation

Pat734

New "Aggregated Contributions Method"

Am I correct in thinking that the new method just requires 40 years of contributions = 2080 regardless of how many years since I first began working OR any GAPS in between?

I got a letter today informing me I would be re-assessed under the above new method of calculating contributory pensions.
I knew the letter was coming, but I didn't know the following (until I read it in my letter)
"The new method allows a person with at least 2,080 weeks of social insurance contributions (or 40 years full time employment) to qualify for a maximum personal rate of contributory pension"
Of course it says "allows" so not sure what that means.
At present I have 2089 contributions over 48 years since I began work. Not realising the implications to my future pension, I had not signed on for free credits during brief times of unemployment in my younger days.
I have an average of 44 when my total is divided over the 48 years since I first began working and therefore I am currently on Band 2 of Contributory Pension €238.50

I had thought the new method was only for the benefit of adding years spent minding children under 12 or other dependent relatives and as I didn't do that, I figured it wasn't relevant to me.
But now I'm wondering if my total contributions of 2089 will be divided by only 40 years????? instead of the 48 and so I will qualify for maximum pension????

Anyone know?

Riskymove

seems fairly clear

It you have 2,080 or more social insurance contributions (or 40 years full time employment) you will qualify for a maximum personal rate of contributory pension.

"You will qualify"

https://www.welfare.ie/en/Pages/State-Pension-Contributory-Rate-Review---FAQ's.aspx#q1a

This is a new calculation method for State Pension Contributory (SPC) being introduced for SPC pensions with a date of birth on or after 1/9/1946, who qualify for a reduced rate of pension. This new method does not use a yearly average to the rate of SPC instead the rate of pension is based on the total number of contributions you have paid.

It you have 2,080 or more social insurance contributions (or 40 years full time employment) you will qualify for a maximum personal rate of contributory pension.

If you have less than 2,080 contributions, up to 520 credited contributions may be used as part of your pension calculation.

The inclusion of new HomeCaring Periods also may help you to qualify for a higher rate of pension entitlement. Up to 1,040 HomeCaring Periods (equivalent to 20 years) may be included as part of your pension re-calculation.

If you have credited contributions on your record, and less than 1,040 HomeCaring Periods we include up to 520 (equivalent to 10 years) credited contributions to your HomeCaring Period, but the combined total of credits and HomeCaring Periods cannot be more than 1,040.

If your combined total of paid contributions, HomeCaring Periods and credited contributions is less than 2,080, you would qualify for a proportionality reduced rate of pension.

For example a combined total of 1,560 of paid contributions, HomeCaring Periods and credited contributions, would entitle you to 75% of pension (1,560 / 2,080 = 75%).

Pat734

Thank you Riskymove. I thought it was too good to be true, so decided I'd ask others to verify.
I'm definitely happy now!!!!

splinter65

Pat734 wrote: »

Thank you Riskymove. I thought it was too good to be true, so decided I'd ask others to verify.
I'm definitely happy now!!!!

Good for you and well done. Yes you getting the full rate. Happy retirement!

Squatter

My understanding is that the new method works by dividing your total no. of reckonable contribs (that's paids plus credits) by 52 which calculates the total number of years that you have.

In your case, 2089/52 > 40 so you're eligible for the max.

What I'm interested in establishing is how will someone with a total of let's say 2002 reckonable contributions be treated:- 2002/52 = exactly 38.5 years.

So will they get 38/40ths of the full pension or 39/40ths or 38.5/40ths?

Anyone know?

splinter65

Squatter wrote: »

My understanding is that the new method works by dividing your total no. of reckonable contribs (that's paids plus credits) by 52 which calculates the total number of years that you have.

In your case, 2089/52 > 40 so you're eligible for the max.

What I'm interested in establishing is how will someone with a total of let's say 2002 reckonable contributions be treated:- 2002/52 = exactly 38.5 years.

So will they get 38/40ths of the full pension or 39/40ths or 38.5/40ths?

Anyone know?

I actually made a query about that at one stage too and now you’ve mentioned it I see I never got a response ! What’s the monetary difference between 38/40ths and 38.5/40ths?

splinter65

€234.17=38.5/40
€237.21=39/40
€3.04 x 53 ( Christmas bonus)=€161.12
Per annum.

Please note that this applies to people who became pensioners after September 2012 and lost out using the average rule. Also note that if you are judged to be owed arrears that they will only be backdated to March 2018.
The government say they plan to start calculating all pension in this way in 2020 but the legislation hasn’t come before the Dail yet so don’t hold your breath.

Squatter

splinter65 wrote: »

The government say they plan to start calculating all pension in this way in 2020 but the legislation hasn’t come before the Dail yet so don’t hold your breath.

I trust Regina - don't you? :P

The bill for the interim arrangements was tabled in the Dail only last week and is already at third stage. (Section 9 deals with the contrib State pension).

https://www.oireachtas.ie/en/bills/bill/2018/120/

splinter65

Squatter wrote: »

I trust Regina - don't you? :P

The bill for the interim arrangements was tabled in the Dail only last week and is already at third stage. (Section 9 deals with the contrib State pension).

https://www.oireachtas.ie/en/bills/bill/2018/120/

Oh I didn’t know that, thanks. I’ve wasted years of my life waiting for the Dail to pass legislation ....