PRSI / Shortfall / Self employed.

Planet X

Hi,

Retirement in 2+ years time, 66.

Abroad, outside Europe, working for 10 years. My choice.

So…..got a couple of PRSI statements over the last couple of years to see where I stand. I stand 10 years short on contributions.

1981 to 1987, 5x52 and 2 extra( part year)

1996 to 2021, 26 x 52.

So, 2022 and next three years are not included.

To end of 2021, 1614 stamps. Short of their 2080 target by a long way.

Question I’m unsure about but hear bandied about, can I buy/ make up the shortfall to get full pension and what is the average rule about, might be wrong here?

Cheers.

coylemj

The averaging system will say that you have an yearly average of 30 something contributions so you would fall into the 30-39 bracket and (if claiming the pension today) you would get a weekly payment of 238.50. You said you will be retiring in 2+ years, I assume that means you will reach the age of 66 in the second half of 2025. That means that your PRSI 'career' will run from 1981 to 2024 - contributions made in the calendar year when you reach pension age don't count. So your average contributions (1,614 divided by 44) will work out as 36.68. If my assumption is wrong and you will reach 66 in 2024 or 2026, it will still leave you in the 30-39 bracket so won't materially affect the outcome.

Under the newer system, now called the 'Aggregated Contributions Method' (was previously called the 'Total Contributions Approach'), your 1,614 is divided by 2,080 and will yield 77.6% and that is the percentage of the maximum rate (currently 265.30) that you will be paid. So the newer system will yield a weekly rate for you of 205.86. Which is lower than the number yielded by the averaging method and you will be paid the higher number. Provided that the averaging system has not been scrapped by the time you reach pension age.

The averaging systen discrminates against people who have a big gap in their PRSI record - typically women who left the workforce to raise children - and the plan is to scrap it. Until that happens, they do both calculations when you apply for the pension and you get the higher number.

If you are out of the country and likely to remain so for the forseeabale future, you will not be able to top up your PRSI record. The only way to do so would be to come back to Ireland and either work or sign on for credits.

https://www.gov.ie/en/publication/927721-state-pension-contributory-rates/

https://www.irishtimes.com/business/personal-finance/q-a-making-sense-of-the-new-way-of-qualifying-for-a-state-pension-1.4678809

Mrs OBumble

Outside Europe - but is there a bilateral agreement for pensions with where you've been?

coylemj

https://www.boards.ie/discussion/comment/120612731#Comment_120612731

Yes, forgot to address that issue.

OP, read the document at the link below and consider if you can combine your Irish contributions with any you may have made in the country where you currently reside and work. The general advice is that you apply in the country where you live and if necessary, the authorities in the country where you are resident will add your Irish contributions to your local contributions when calculating your entitlement to a state pension.

If the country where you now reside has no bilateral agreement with Ireland then you will simply apply for an Irish pension when you reach 66.

https://www.gov.ie/en/publication/dc7910-guidelines-on-application-of-bilateral-agreements/

Planet X

Sorry……not clear it seems. I came back to Ireland in ‘95 and commenced work Jan 1996 to present. January 2024 will be 28 years in current job.

I worked in the Middle East so no insurance paid in that country (‘86 - ‘96). No pension contributions in that country.

Planning to retire in July 2025, my birthday.

So adding to my total so far will add another, at least, 156 stamps. 2022, ‘23 and ‘24 plus 6 months of 2025.

1614+156 will give at least, 1770, about 85%.

coylemj

OK, on top of your (to end of 2021) 1,614 contributions, you will clock up three more years - 2022, 2023 and 2024. Which will bring you up to 1,770. As your PRSI contribution record stops at the end of the calendar year before you reach pension age, any contributions you make in 2025 (when you will reach 66) will not count.

1,770 contributions over 44 years (1981 to 2024 incl.) means you will have an average of 40.23 contributions so, under the averaging system, you will (at today's rates) get a pension of 260.10 p.w.

Under the new 'Aggregated Contributions Method', your 1,770 divided by 2,080 equals 85.1% so applying that to the current maximum rate (265.30), you would get 225.76 p.w.

So you are still doing better under the averaging system.

Planet X

OK, so the higher number will be used, TCA v Averaging. (As long as averaging is not scrapped)

coylemj

https://www.boards.ie/discussion/comment/120613530#Comment_120613530

If both systems are still in place when you reach 66, you will be paid the higher number i.e. they will use the calculation which yields the bigger weekly pension.

Planet X

One last query……is there any way to make up / buy missing PRSI payments?

Jim2007

https://www.boards.ie/discussion/comment/120619019#Comment_120619019

It been a few years since I looked at this for myself and the answer was no because time lap was too great. Even if I moved back to Ireland now I'd have no access to any Irish healthcare or public services.

coylemj

https://www.boards.ie/discussion/comment/120619019#Comment_120619019

The gap in your contributions record is because you were out of the country so the answer is no. If you had been living in Ireland but not working, you could potentially and retrospectively claim credits for a period when you were looking after children (up to the age of 12) or caring for an incapacitated person aged over 12.

https://www.gov.ie/en/publication/99f84f-operational-guidelines-prsi-credited-social-insurance-contributions/

Geuze

https://www.boards.ie/discussion/comment/120619172#Comment_120619172

PRSI is nothing to do with healthcare (except for Treatment Benefit).

Jim2007

https://www.boards.ie/discussion/comment/120625270#Comment_120625270

It does, it determines the state with primary responsibility for your public services in retirement. Under EU directive the state that pays the largest portion of your state pension is also responsible for the provision of your healthcare. As I have spent over three decades working in Switzerland, it will pay almost all of my state pension and consequently if I retire to Ireland I will need to continue paying Swiss health insurance and they will issue me with a card to access the Irish healthcare services. And while I would be entitled to a bus pass etc these are also issued from Switzerland. It is the same for all states of the EU/EEA/CH.

Geuze

Ok, but for typical residents of Ireland, PRSI status is not linked to entitlement to healthcare.

MintyMagnum

What is signing on for credits?

Jim2007

https://www.boards.ie/discussion/comment/120625640#Comment_120625640

And the OP states he has been working outside Ireland for at least 10 years...

coylemj

https://www.boards.ie/discussion/comment/120625660#Comment_120625660

If you are not working and cannot clam Jobseeker's Allowance (which is means tested) or disability benefit, you can sign on at your local SW office for credits. When it comes time to claim the state pension, you can use up to 10 years worth of 'signing on' credits to fill in your PRSI record for periods when you were not working.

Signing on for credits involves making a declaration that you are not working but are availble for and actively seeeking employment.

https://www.gov.ie/en/publication/80e5ab-prsi-pay-related-social-insurance/#credited-contributions

coylemj

https://www.boards.ie/discussion/comment/120619172#Comment_120619172

Not true in the case of health services. The HSE website says this ...

The HSE provides health and social services to everyone living in Ireland. Our services are delivered to young and old, in hospitals, health facilities and in communities across the country.

https://www.hse.ie/eng/services/list/

Which other 'public services' do you reckon would not be available to you?

Jim2007

https://www.boards.ie/discussion/comment/120626536#Comment_120626536

I don't want to derail this thread.... but I have letters from both the Swiss Federal Health Authority and the HSE confirming that I'm not entitled to access the Irish healthcare services. This is in line with the EU directive and agreements on FMOP. And that is where I'm going to leave the topic.