Contributory State Pension

mart 23

What amount of bank savings are you allowed to have before affecting the amount of the Contributory State Pension you will receive.

Riskymove

contributory pension is not means tested

splinter65

mart 23 wrote: »

What amount of bank savings are you allowed to have before affecting the amount of the Contributory State Pension you will receive.

Con Pension is based on PRSI contributions so not means tested. If you apply for your spouse then she/he will be means tested.

olestoepoke

My wife has worked 3 full days a week for the last 15 years will she be entitled to the contributory pension? She has paid PRSI and a small bit of tax every week. Are you entitles to a full-rate contribution even though you only worked 27 hours a week?

ari101

olestoepoke wrote: »

My wife has worked 3 full days a week for the last 15 years will she be entitled to the contributory pension? She has paid PRSI and a small bit of tax every week. Are you entitles to a full-rate contribution even though you only worked 27 hours a week?

Unfortunately it is quite complicated. I've set out the basic rules.

I would assume 27 hours means gross pay > 38 eur a week gross, so the prsi contribution is counted for pension purposes. I also assume this is standard PRSI class, not self employed work for example. Assuming no breaks at all that would be 780 contributions.

Therefore it sounds like she has done the minimum 10 years contributions required (520).

There are a few ways to calculate pension rate:
1. Average annual contributions since first ever PRSI contribution.

Rates for those eligible post 2012, based on annual average number of contributions
(Ave cont. and current rate per week)
10+ 99/wk
15+ 161/wk
20+ 211/wk
30+ 223/wk
40+ 243/wk
48+ 248/wk

2. Average annual contributions since 1979/80 tax year. (48+/year must be reached to apply this method)

3. Total contributions made are > 40years * 52

If she never ever worked before 15 years ago and has been without break since it might be simply that she has 52/year since entry to work force 15 years ago and therefore gets full pension...?

If not, in each scenario she may be able to increase her contributions by claiming home carers contributions (max 20 years worth, 1040 contribtuions), if she stayed at home full time to care for kids <12 or ill or disabled persons.

Total and Average since 1979 methods may fall short, unless she has PRSI contributions from other work prior...?

You can request a contribution statement from MyWelfare to identify the date of first contribution and how many are on record. From there you may be able to work out the entitlement or, possibly more easily, the social welfare office may be able to advise her on what to expect also.

olestoepoke

Thank you, great summary

BowWow

Can I jump in here...

I currently get a full adult allowance for my wife on my Contributory Pension. It's currently €165.40, but will go to €222.50 on her 66th. birthday.
She will be applying for a Contributory Pension in her own right, but does not have enough contributions/credits for a full Contributory Pension. What will happen if the calculations for her Contributory Pension produce an amount of less that €222.50?

Thanks..

Necro

BowWow wrote: »

Can I jump in here...

I currently get a full adult allowance for my wife on my Contributory Pension. It's currently €165.40, but will go to €222.50 on her 66th. birthday.
She will be applying for a Contributory Pension in her own right, but does not have enough contributions/credits for a full Contributory Pension. What will happen if the calculations for her Contributory Pension produce an amount of less that €222.50?

Thanks..

Natural Justice applies so she will continue to receive the higher rate, either the Adult allowance or a pension in her own right, whichever would entitle her to a higher rate

olestoepoke

I emigrated when I was 22 and returned 15 years later will this hurt my contributory state pension. Assuming I had 8 years of full stamps before I left circa 1998 and post gap will have approx 18 years of full stamps. I emigrated to the US and did not pay any social insurance over there.

ari101

olestoepoke wrote: »

I emigrated when I was 22 and returned 15 years later will this hurt my contributory state pension. Assuming I had 8 years of full stamps before I left circa 1998 and post gap will have approx 18 years of full stamps. I emigrated to the US and did not pay any social insurance over there.

Yeah looks that way:
Entry into insurance ~1990?
Age 22 in 98, pension at 67 (could be higher by the time you get there) therefore pension in ~2043
Years in insurance 2043-1990 = 53 years
Total contributions (8+18)*52 = 1352
Average contributions 1352/53 = 25.5, round to nearest whole number = 26.
Pension rate currently: 211/week

There are agreements with US and other countries which could increase this for people working abroad for a period, but you say no social insurance was paid in US so likely don't apply to you.

This calculation is my interpretation of the rules so may not be accurate (I don't work for social welfare ). Request your own benefits statement to check record and maybe it is worth asking social welfare if there is anything you can do to increase this (e.g.voluntary contributions, not sure if they are allowed for you, or if the cost benefit would be worth it). Means tested state pensions also exist if you have limited private provisions.

I'm looking at a 50 year averaging period myself with gaps (not as big as yours) but hoping to hit total 40*52 instead as it is lower than needing to average 48+ over the longer period. That new (2018) rule will help some people at least.

I find it tough that some one could not work a day in their life till 55 and get a full pension here at 66 with 10 good years, but if you paid prsi as a teenager and too a long break later (without claiming social welfare, or without paying it in a country with an agreement with Ireland) you might not be entitled to the same!

olestoepoke

I suppose this is when you know you're getting old you start worrying about pensions. The smarter people sorted it when the were younger but I galavanted across Europe and the US for years with not a care in the world. I may start looking into a private pension soon.

Dodge

ari101 wrote: »

If not, in each scenario she may be able to increase her contributions by claiming home carers contributions (max 20 years worth, 1040 contribtuions), if she stayed at home full time to care for kids <12 or ill or disabled persons.

Just to clarify this. Home caring credits will only be applied if using the total contributions approach. Up to 20 can be applied so it gives those who qualify for home caring credits the chance of a full pension with 20 years paid cons

Home caring credits are not applied to the averaging method. Instead a ‘home makers isregard’ up to 20 years caring for under 12s can be applied but only from 1994 (so likely won’t be available fully to those reaching pension age soon).

The disregard is removed from the averaging calculation.

For many the result may be the same but the 1994 rule is the biggest difference. In the averaging method, no allowance is available for home caring before 1994

Dodge

ari101 wrote: »

I find it tough that some one could not work a day in their life till 55 and get a full pension here at 66 with 10 good years, but if you paid prsi as a teenager and too a long break later (without claiming social welfare, or without paying it in a country with an agreement with Ireland) you might not be entitled to the same!

It’s one of the reasons why DSP wants to move away from averaging. You can see more on that here https://assets.gov.ie/43732/47ff74a1b5684adfa345acbafceeb4da.pdf

ari101

Dodge wrote: »

It’s one of the reasons why DSP wants to move away from averaging. You can see more on that here https://assets.gov.ie/43732/47ff74a1b5684adfa345acbafceeb4da.pdf

Thank you, I like updating my knowledge so appreciate the share and any corrections. It's been out of considering personal circumstances and general interest that got me into rooting around in social welfare rules

olestoepoke

ari101 wrote: »

Thank you, I like updating my knowledge so appreciate the share and any corrections. It's been out of considering personal circumstances and general interest that got me into rooting around in social welfare rules

Sorry if I'm annoying you but what do the new rules (TCA) mean for someone with a 15 year gap like myself. I actually went and did the math after your very helpful post and I will have 29 years and my wife will have 28 years full paid stamps taking into account the gaps.

ari101

olestoepoke wrote: »

Sorry if I'm annoying you but what do the new rule mean for someone with a 15 year gap like myself. I actually went and did the math after your very helpful post and I will have 29 years and my wife will have 28 years full paid stamps taking into account the gaps.

Any changes enacted to date are already described above.

Moving away from the averaging system can help people with early entry to workforce and gaps, but they are still looking for a substantial amount of contributions to get a full pension.

A lot of the changes were because women were not getting pensions of any decent size as a result of working in the home full time.

I'm afraid possibly future revision are beyond the scope of my knowledge.

Edit: At this point I defer to Dodge's interpretation of the Total Rule

Unless you can get to 2080 contributions by retirement age the new Total rule is no help, but if either of ye did stay home with kids for 11/12 years you might be able to get there on that.

Otherwise, you need to look at the average. Calculate the number of years between 1st contribution ever and when you reach pension age, and divide your contributions by that to see which bracket you are in.

Dodge

olestoepoke wrote: »

Sorry if I'm annoying you but what do the new rules (TCA) mean for someone with a 15 year gap like myself. I actually went and did the math after your very helpful post and I will have 29 years and my wife will have 28 years full paid stamps taking into account the gaps.

Currently* you will have both calculations made. The average (effectively yearly cons divided by years since entering insurance employment) and the TCA method.

You’ll get whatever is most beneficial. So you’ll get 29/40 of the full rate and she’ll get 28/40 (provided she has minimum of 10 paid) in the TCA calculation

*I say currently as there’s a commission on pension currently in situ and they’re due to report by end of June. Could all change soon after