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.