State pension

celtic_oz

apparently you need 10 years of voluntary contributions to qualify for the state pension.


If you have 15 years of years of voluntary contributions paid already and retire early is it advisable to pay the minimum ( about €500 ) per annum until age 66 to ensure you get the state pension in case the rules change?

hawthorne

celtic_oz wrote: »

apparently you need 10 years of voluntary contributions to qualify for the state pension.


If you have 15 years of years of voluntary contributions paid already and retire early is it advisable to pay the minimum ( about €500 ) per annum until age 66 to ensure you get the state pension in case the rules change?

.

10 years of voluntary contribution will not qualify you for a full state pension.
The same to be said about 15 years.
If you have no other credits or contributions for employment,times of unemployment,child raising or caring for someone, you are stuck with only a part pension.
It is advisible to have as many paid contributions as possible. I would keep paying the voluntary contributions until you reach the age of 66- and probably 67 or 68. Depends on your current age.Pension age is going up as well over the next decade.
Plenty of changes ahead at the moment.

This might give you an idea.
https://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/older_and_retired_people/state_pension_contributory.html

Portsalon

celtic_oz wrote: »

apparently you need 10 years of voluntary contributions to qualify for the state pension.


If you have 15 years of years of voluntary contributions paid already and retire early is it advisable to pay the minimum ( about €500 ) per annum until age 66 to ensure you get the state pension in case the rules change?

Yes it is. The more paid contributions you have made, the higher your state contributory pension will be.

Note that the state pension qualifying age will be 67 after 01/01/2021 and 68 after 01/01/2028.

celtic_oz

thanks .. is there a table or algorithm thats used for post 2012 people

splinter65

celtic_oz wrote: »

thanks .. is there a table or algorithm thats used for post 2012 people

If you were minding your children under the age of 12 then you can add up the years that you didn’t work because you were at home looking after them from the day you stopped work after your eldest was born until the day your youngest turned 12.
If you had another period minding someone else who needed full time care and attention and you didn’t already get credit for that then you can add that period to the years.
Then you just leave those years out when you add up all the years from you first started work until you got to 66.
So say if you started work at 18 and there were 18 years that you were minding children.
Then the amount of years that are taken into account will be 30 instead of 48.
Say that you had 52 stamps for every year that you were working outside the home.
Before now your average would have been the 1560 PRSI contributions divided by the 48 years of your working life.
That would have given you an average of 32.5 contributions, entitling you to a pension of €223.20 per week.
Under this “readjustment” your average will be the 1560 contributions divided by only the 30 years.
This will give you and average of 52, and qualify you for the full pension, €248.30 per week.

celtic_oz

ok so the average is still used

So say you have an average of 40 contributions and you retire early

If you continue to pay ~€500 per year how does that affect your average ?

riddles

celtic_oz wrote: »

ok so the average is still used

So say you have an average of 40 contributions and you retire early

If you continue to pay ~€500 per year how does that affect your average ?

The OAP won’t exist in another decade or so surely?

celtic_oz

celtic_oz wrote: »

apparently you need 10 years of voluntary contributions to qualify for the state pension.


If you have 15 years of years of voluntary contributions paid already and retire early is it advisable to pay the minimum ( about €500 ) per annum until age 66 to ensure you get the state pension in case the rules change?

I think that there’s a limit on how long you can make voluntary contributions. http://www.welfare.ie/en/Pages/PRSI---PRSI-Voluntary-Contributions.aspx

hawthorne

celtic_oz wrote: »

ok so the average is still used

So say you have an average of 40 contributions and you retire early

If you continue to pay ~€500 per year how does that affect your average ?

I struggle with your "early retirement".
You can stop working any time you want and live on your own means. But you won't get any state pension at all until you reach the age of 66 (or 67,68-depending on the year you was born).There is no early retirement system here in Ireland which would give you a state pension before you reach pension age.
And you can only pay voluntary contributions until you reach pension age-66,67 or 68 years.You cannot pay anymore after you reached pension age.
Your average of your contributions over the years- or your total contributions, if you are judged by the new TCA system- will be decided for the day you reach pension age.
In other words- you only get a pension based on for what you have paid in or can get credited for on the date of your 66th,67th or 68th birthday.No further contributions are possible afterwards.
If you keep paying your voluntary contributions, your average contribution calculation wil naturly go up. If you stop paying, your average contribution will naturally go down.
If you have an average of 40 contributions now and stop paying, your average will go under 40 in the follwing year and will keep falling year by year.
Very important: Ireland is changing over to TCA. That means, the average calculation won't be done any more.All what is counting then is your actually credits and reckonable contributions.
Until the end of this year, there is still the choice between average calculation and TCA. As of 2020 the only system used will be TCA. This happens under the condition that the necessary laws are passed in time. There still may might be some surprises around until the average calculation system is finally history.

Portsalon

celtic_oz wrote: »

ok so the average is still used

So say you have an average of 40 contributions and you retire early

If you continue to pay ~€500 per year how does that affect your average ?

If you are allowed to and continue to pay €500 a year in voluntary contributions, then your total number of paid contributions will increase by 52 annually.

On the current assumption that the full contributory state pension will be paid to everyone with 2080 (or more) reckonable contributions, every extra year will be worth 52/2080ths of the full pension to you. That's 2.5%.

(Note that it seems likely that the €500 annual Class S voluntary contribution will be increased - although that's just my opinion).

celtic_oz

hawthorne wrote: »

I struggle with your "early retirement".
You can stop working any time you want and live on your own means. But you won't get any state pension at all until you reach the age of 66 (or 67,68-depending on the year you was born).There is no early retirement system here in Ireland which would give you a state pension before you reach pension age.
And you can only pay voluntary contributions until you reach pension age-66,67 or 68 years.You cannot pay anymore after you reached pension age.
Your average of your contributions over the years- or your total contributions, if you are judged by the new TCA system- will be decided for the day you reach pension age.
In other words- you only get a pension based on for what you have paid in or can get credited for on the date of your 66th,67th or 68th birthday.No further contributions are possible afterwards.
If you keep paying your voluntary contributions, your average contribution calculation wil naturly go up. If you stop paying, your average contribution will naturally go down.
If you have an average of 40 contributions now and stop paying, your average will go under 40 in the follwing year and will keep falling year by year.

Talk about complicating things

Retiring early .. stopping work at before 65 say 55.

No one expects state pension till 67 or later if they change it again

I asked if you continue to pay 500 or whatever the minimum is how is the average calculated .. so that when you retire at 67 what can you collect

celtic_oz

Portsalon wrote: »

If you are allowed to and continue to pay €500 a year in voluntary contributions, then your total number of paid contributions will increase by 52 annually.

On the current assumption that the full contributory state pension will be paid to everyone with 2080 (or more) reckonable contributions, every extra year will be worth 52/2080ths of the full pension to you. That's 2.5%.

(Note that it seems likely that the €500 annual Class S voluntary contribution will be increased - although that's just my opinion).

Perfect thanks. Why would you not be able to pay €500 ?

hawthorne

celtic_oz wrote: »

Talk about complicating things

Retiring early .. stopping work at before 65 say 55.

No one expects state pension till 67 or later if they change it again

I asked if you continue to pay 500 or whatever the minimum is how is the average calculated .. so that when you retire at 67 what can you collect

TCA: You will collect 1/40th of currently E248.30 for every full year you have paid in.

Average: The sum of all your credits/contributions starting from your first year recorded to your 67th birthday divided through the number of years you was registered in SW gives you your average. You find a table showing your band with the payment you can expect in my first post.

Note the many changes ahead. Impossible to give you an exact figure.

celtic_oz

celtic_oz wrote: »

Talk about complicating things

Retiring early .. stopping work at before 65 say 55.

No one expects state pension till 67 or later if they change it again

I asked if you continue to pay 500 or whatever the minimum is how is the average calculated .. so that when you retire at 67 what can you collect

You cannot pay the voluntary contributions indefinitely. I think the limit is 5 years ending with retirement age.

hawthorne

Deleted User wrote: »

You cannot pay the voluntary contributions indefinitely. I think the limit is 5 years ending with retirement age.

Nothing mentioned of a 5 year time limit here:
http://www.welfare.ie/en/Pages/Voluntary-Pay-Related-Social-Insurance-PRSI-Contributions.aspx

Varta

What if you take yourself out of the workforce at 60 and stop paying voluntary contributions? Does this still reduce your average?

hawthorne

Yes- it is surely reducing your average. Any month not paid in brings down your average.

splinter65

celtic_oz wrote: »

Talk about complicating things

Retiring early .. stopping work at before 65 say 55.

No one expects state pension till 67 or later if they change it again

I asked if you continue to pay 500 or whatever the minimum is how is the average calculated .. so that when you retire at 67 what can you collect

You can only make voluntary contributions for 60 months. So if you stop work at 55 you will no longer be making any contributions at age 60, leaving at least 7 years with neither contribution or credit.
Only you know if you will have the required 40 years credit/contributions to qualify for the State Pension at 67/68.

Varta

Grossly unfair to self-employed people who become unemployed but aren't entitled to welfare.

splinter65

hawthorne wrote: »

Nothing mentioned of a 5 year time limit here:
http://www.welfare.ie/en/Pages/Voluntary-Pay-Related-Social-Insurance-PRSI-Contributions.aspx

It’s here.

Apply to make your voluntary contribution within 60 months (5 years) of the end of the last completed tax year (contribution year) during which you last paid compulsory insurance or you were last awarded a credited contribution. (Since February 2017, the time limit for making voluntary contributions was extended from 12 months to 60 months.)

From

https://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/social_insurance_prsi/voluntarysocialinsurancecontributions.html

Varta

I think that just refers to making the application.

hawthorne

splinter65 wrote: »

It’s here.

Apply to make your voluntary contribution within 60 months (5 years) of the end of the last completed tax year (contribution year) during which you last paid compulsory insurance or you were last awarded a credited contribution. (Since February 2017, the time limit for making voluntary contributions was extended from 12 months to 60 months.)

From

https://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/social_insurance_prsi/voluntarysocialinsurancecontributions.html

It does not say you are restricted to 5 years.
It says you have to start paying within 5 years of making your last (compulsory) contribution!
Any voluntary contribution after the 5 year period is not allowed.

splinter65

hawthorne wrote: »

It does not say you are restricted to 5 years.
It says you have to start paying within 5 years of making your last (compulsory) contribution!
Any voluntary contribution after the 5 year period is not allowed.

No. It says clearly in the brackets that the time limit for making the contributions is 5 years. Take another look.

hawthorne

splinter65 wrote: »

No. It says clearly in the brackets that the time limit for making the contributions is 5 years. Take another look.

I read it differently. It seems to say that the old time limit for starting to pay was 12 months- but was changed to 5 years in 2017.
There is no mentioning of any time limit on the SW page. In fact it says you can pay until you reach pension age.

The stuff in brackets refers to this:
https://familycarers.ie/changes-to-the-prsi-voluntary-contribution-scheme-what-does-this-mean-and-will-it-affect-me-as-a-carer/

splinter65

hawthorne wrote: »

I read it differently. It seems to say that the old time limit for starting to pay was 12 months- but was changed to 5 years in 2017.
There is no mentioning of any time limit on the SW page. In fact it says you can pay until you reach pension age.

The stuff in brackets refers to this:
https://familycarers.ie/changes-to-the-prsi-voluntary-contribution-scheme-what-does-this-mean-and-will-it-affect-me-as-a-carer/

Ah we won’t fall out Hawthorne. We’ll agree to disagree.

splinter65

Varta wrote: »

Grossly unfair to self-employed people who become unemployed but aren't entitled to welfare.

Self employed people can make voluntary contributions.
Self employed people can make SW applications, many do and are awarded JSA.
They are also no entitled to Invalidity Pension.

Portsalon

hawthorne wrote: »

It does not say you are restricted to 5 years.
It says you have to start paying within 5 years of making your last (compulsory) contribution!
Any voluntary contribution after the 5 year period is not allowed.

That's (almost) correct. (In very exceptional circumstances, this 5 year period may be extended at the discretion of the Minister.)!

It's spelled out in the Operational Guidelines on the DEASP website which is where people need to go to see how the Department itself administers its various schemes. In this case: http://www.welfare.ie/en/Pages/PRSI---PRSI-Voluntary-Contributions.aspx

dark crystal

hawthorne wrote: »

I read it differently. It seems to say that the old time limit for starting to pay was 12 months- but was changed to 5 years in 2017.
There is no mentioning of any time limit on the SW page. In fact it says you can pay until you reach pension age.

The stuff in brackets refers to this:
https://familycarers.ie/changes-to-the-prsi-voluntary-contribution-scheme-what-does-this-mean-and-will-it-affect-me-as-a-carer/

You are correct.

Say your last paid contribution (either self-employed or as a PAYE worker) was in 2012 and you now wished to pay VCs to make up the gap in your record, you would be outside the 5 year timeframe to do so, even if you made subsequent contributions in 2014, 2015 etc. That is where the 5 year limit becomes relevant.

In relation to paying VCs up until pension age, once you meet the relevant criteria, i.e; minimum number of contributions etc., When you apply, there is no cap on how many years you can pay VCs up to pension age. The only caps that currently apply are the number of credits or homemaker's years they will count as reckonable when calculating your pension entitlement.

Squall Leonhart

Is there any way to check what your contributions are to date....?
I have been employed since aged 17, I'm now 33.

It hasn't been continuous employment, it's been broken into periods of unemployment and signing on, in full time education, few years out of the country, part time work and the last 8 years full time employment.

I wouldn't even know myself how to total up what my contributions have been.

splinter65

Squall Leonhart wrote: »

Is there any way to check what your contributions are to date....?
I have been employed since aged 17, I'm now 33.

It hasn't been continuous employment, it's been broken into periods of unemployment and signing on, in full time education, few years out of the country, part time work and the last 8 years full time employment.

I wouldn't even know myself how to total up what my contributions have been.

PRSI Records
Department of Employment Affairs and Social Protection
McCarter's Road
Ardaravan
Buncrana
Donegal
Ireland

Tel: (01) 471 5898 (If calling from outside Ireland please call +353 1 471 5898)
Locall: 1890 690 690 (Note: the rates charged for using 1890 (Lo-call) numbers may vary)

Portsalon

Squall Leonhart wrote: »

Is there any way to check what your contributions are to date....?
I have been employed since aged 17, I'm now 33.

It hasn't been continuous employment, it's been broken into periods of unemployment and signing on, in full time education, few years out of the country, part time work and the last 8 years full time employment.

I wouldn't even know myself how to total up what my contributions have been.

First register on https://www.mygovid.ie

then, once registered and validated, you can go to mywelfare.ie and look it up yourself.

Or do it the way that splinter suggested above.

hawthorne

Portsalon wrote: »

First register on https://www.mygovid.ie

then, once registered and validated, you can go to mywelfare.ie and look it up yourself.

Or do it the way that splinter suggested above.

To be able to do that you need to have a public services card.
The whole thing is worthless without it.
No card- no look-up of your contributions!

Squall Leonhart

hawthorne wrote: »

To be able to do that you need to have a public services card.
The whole thing is worthless without it.
No card- no look-up of your contributions!

I just discovered that... I don't have a PSC

TimeToShine

Portsalon wrote: »

Note that the state pension qualifying age will be 67 after 01/01/2021 and 68 after 01/01/2028.

At that rate of increase it makes you wonder if it’s worth it for young people investing in a pension if they won’t get their hands on it until 72/73.

Varta

splinter65 wrote: »

Self employed people can make voluntary contributions.
Self employed people can make SW applications, many do and are awarded JSA.
They are also no entitled to Invalidity Pension.

The point I made was that if you stop those voluntary contributions when you have reached forty years worth, but are not yet 67 (68, etc) your average starts to go down. Therefore you are forced into an overpayment situation. Also making voluntary payments when you have no income is a bit tricky. And yes, you can have no income as a self-employed person and still fail to qualify for JSA. You can only qualify for an invalidity pension if you cannot work through invalidity.

splinter65

Squall Leonhart wrote: »

I just discovered that... I don't have a PSC

Just fire them off a quick note and they’ll send you your record in the post. Everyone in their 30s really needs to know where they stand.
Believe me, the next 20 years disappear in a puff of smoke....

hawthorne

Varta wrote: »

The point I made was that if you stop those voluntary contributions when you have reached forty years worth, but are not yet 67 (68, etc) your average starts to go down. Therefore you are forced into an overpayment situation. Also making voluntary payments when you have no income is a bit tricky. And yes, you can have no income as a self-employed person and still fail to qualify for JSA. You can only qualify for an invalidity pension if you cannot work through invalidity.

The new TCA approach will solve that problem. There will be no average anymore. All what is counting will be your contributions and reckonable credits.

Portsalon

TimeToShine wrote: »

At that rate of increase it makes you wonder if it’s worth it for young people investing in a pension if they won’t get their hands on it until 72/73.

The state pension age of 68 is guaranteed until at least 2035.

After that, I suspect that the looper left wing parties will be in power, so pensions will probably be payable to anyone aged 16 or older. Happily, that will be long after my ashes have been scattered over Dunlewy lough.

Portsalon

hawthorne wrote: »

To be able to do that you need to have a public services card.
The whole thing is worthless without it.
No card- no look-up of your contributions!

Oops! :P

It never even struck me that any intelligent, non tinfoil hat wearing, citizen wouldn't have bothered to obtain a PSC at this point in time!

splinter65

Portsalon wrote: »

The state pension age of 68 is guaranteed until at least 2035.

After that, I suspect that the looper left wing parties will be in power, so pensions will probably be payable to anyone aged 16 or older. Happily, that will be long after my ashes have been scattered over Dunlewy lough.

...and me too!

hawthorne

Portsalon wrote: »

Oops! :P

It never even struck me that any intelligent, non tinfoil hat wearing, citizen wouldn't have bothered to obtain a PSC at this point in time!

Never needed one. I won't bother until I am forced to get one.

Squall Leonhart

Portsalon wrote: »

Oops! :P

It never even struck me that any intelligent, non tinfoil hat wearing, citizen wouldn't have bothered to obtain a PSC at this point in time!

Harsh! I'm not a tinfoil hat wearer and think I'm intelligent, just never needed one for anything. I'm not against them at all

hawthorne

hawthorne wrote: »

Never needed one. I won't bother until I am forced to get one.

And no doubt, complain loudly about the delay in receiving your payment.

Portsalon

Squall Leonhart wrote: »

Harsh! I'm not a tinfoil hat wearer and think I'm intelligent, just never needed one for anything. I'm not against them at all

My apologies. My comment was intended to be flippant, but on reflection was definitely a trifle on the harsh side.

Portsalon

hawthorne wrote: »

Never needed one. I won't bother until I am forced to get one.

Sounds rather like the lad who never bothered to take out life assurance because he had never needed it!

LuasSimon

If I am now 50 and have been working full time since I’m 18 does that mean for pension purposes I have accumulated 32/45ths of the state pension when I get to 68 already ??
Or if you start at 18 and don’t get pension till 68 it’s 50ths ?

Portsalon

LuasSimon wrote: »

If I am now 50 and have been working full time since I’m 18 does that mean for pension purposes I have accumulated 32/45ths of the state pension when I get to 68 already ??
Or if you start at 18 and don’t get pension till 68 it’s 50ths ?

Under the proposed TCA system, once you have paid PRSI for a full 40 years you'll be entitled to the full pension. So, if you continue in employment until you are 58, your 40 years of accumulated PRSI will entitle you to receive the full Contributory State pension when you turn 68.

(Note that the PRSI contributions that you will continue to pay between age 58 and age 68 will have absolutely no effect on the amount of pension that you will receive.)

hawthorne

LuasSimon wrote: »

If I am now 50 and have been working full time since I’m 18 does that mean for pension purposes I have accumulated 32/45ths of the state pension when I get to 68 already ??
Or if you start at 18 and don’t get pension till 68 it’s 50ths ?

We still don't know what the final calculation for the TCA will be. At the moment they have it on 40 years. They might also go for 35,32 or 30 years in the final version. This will be decided soon- so the DoSP says.
If you started working at the age of 18 and if you are 50 now, you would have 32/40th of the full pension accumulated. The count stops at 40 years- all other time will be disregarded at the final count.
40/40th give you Euro 248.30 per week at the moment. You cannot get more than that out of this system.

hawthorne

Portsalon wrote: »

Sounds rather like the lad who never bothered to take out life assurance because he had never needed it!

LOL!
I don't have that either. That is something for rich people. Us paupers don't have the dosh to feed the insurance mafia.

karenalot

How does contributory and non contributory work on the TCA?

Going by today’s pension rates, let’s say I work for 30 years out of 40 years required. This would give me 75% of the current €248.30 contributory pension which equates to €186 a week.

If I don’t work at all during my lifetime would I get the non contributory which is €236? Also is anything under 10 years of employment considered as non contributory?

hawthorne

karenalot wrote: »

How does contributory and non contributory work on the TCA?

Going by today’s pension rates, let’s say I work for 30 years out of 40 years required. This would give me 75% of the current €248.30 contributory pension which equates to €186 a week.

If I don’t work at all during my lifetime would I get the non contributory which is €236? Also is anything under 10 years of employment considered as non contributory?

No TCA system on the non-contributory pension. Yes- you would get the full rate if you did not work a single day in your life but fulfill all the necessary regulations. It is means tested.

Anything under 10 years of contribution will not give you anything on the contributory pension system. 10 years is the minimum you have to have paid in.
If you only have under 10 years paid in on your pension day, you can only apply for the non-contributory pension.
If you have 10 or more years clocked up on pension day, you can decide for which pension system you want to go.