How to max out both Irish and UK state pensions

[Kev1964]

FTP here and I'm fascinated to just now find a forum with such a wealth of information and opinion. I thought I'd share a challenge I'm facing along the lines of the title.
I'm 59 now and so have a few years to try to take whatever steps might be possible to maximise my retirement income.

I started to pay PRSI at age 17 for 5 years or so before going to the UK in 1986 and paying NICs for 14 years. I came home to Ireland in 2000 to pick up my PRSI contributions again. Happily I've been in and out the other side of paying UK NICs from 2006 up to present (at Class 2 rates) now giving me approx 31 years of NICs so far (on my way to 35). If I pay another 4 years that's the UK state pension max'd out, I hope. In reality I can pay another 8 years of NICs (if I want). Why would I want to pay 8 and not 4? Read on...

Turning to my Irish state pension and because I started to work so early, I calculate that I will never be able to max this pension using the average calculation method. I am also unable to max out under TCA. I will be short approx 240 PRSI contributions (from the total of 2080) by the time I'm 66.

My question is, if I pay NICs for the next 8 years (to age 67) will the additional 4 years (beyond what is necessary to max the UK state pension) be used by the Irish system to get my PRSI contributions at or near the 2080 required for a full Irish state pension? In other words can they be used to top up my Irish record of social security payments?

I've trawled all over the Gov.ie websites to find the answer and also sent the question to the Irish pensions dept but have got nowhere. I'd appreciate any views that are out there. Thanks...

 

[Kev1964]

Just to follow on from my post above....another way of asking the same question is .... if you can somehow pay/be credited with 75 years of social security payments across a combination of PRSI and NICs, is one entitled to a maximum state pension in both jurisdictions (ie UK & Irl)? I’m ignoring the Irish “average calculation method” in this instance.

 

[NoRegretsCoyote]

I very much doubt that DSP would accept that voluntary contributions in another jurisdiction could be used, but you might be able to make the case for paid ones.

So you would present it as something like the following :

• UK eligibility of 35 reached via eight paid years and 29 voluntary NI years, with eight paid years left over
• These eight paid UK NI years should be used to close the gap in Ireland to get you to 2080 PRSI contributions

I don't know if this would be acceptable.

There is the UK/Ireland bilateral treaty on social security which might shed light but it's not for the amateur.

I had an unusual case like this a few years ago and DSP would not give me a straight answer in correspondence. I got my local TD to put down a parliamentary question on the topic and I got a clear answer then.

 

[Kev1964]

Deleted post.

 

[NoRegretsCoyote]

Edit: Articles 12 and 20 (2) seem to refer to pensions from each country being an accepted state of affairs so perhaps this is what the “unless otherwise provided” refers to. I’ll keep on reading and enjoy the highs and lows of “am I or am I not entitled to two pensions”!

Correct.

It's a while since I read the Treaty but it is more designed to eliminate potential for entitlements to working-age benefits in both Ireland and UK.

Two pensions can be drawn if the individual is eligible. But not clear if it provides guidance on your specific case.

 

[Kev1964]

Correct.

It's a while since I read the Treaty but it is more designed to eliminate potential for entitlements to working-age benefits in both Ireland and UK.

Two pensions can be drawn if the individual is eligible. But not clear if it provides guidance on your specific case.

Hi NRC. Thanks for your replies. I deleted my last post as I realised I had gone a rabbit hole! Easily done when you over research something, I find!

Section 2 (articles 25 to 33 incl) seem to be where the meat and drink of this issue resides. I’ll read it a few times to see if I can grasp it. Lots of references to overlapping periods and benefits!! :-(

 

[ronaldo]

I very much doubt that DSP would accept that voluntary contributions in another jurisdiction could be used, but you might be able to make the case for paid ones.

So you would present it as something like the following :

• UK eligibility of 35 reached via eight paid years and 29 voluntary NI years, with eight paid years left over
• These eight paid UK NI years should be used to close the gap in Ireland to get you to 2080 PRSI contributions

I don't know if this would be acceptable.

There is the UK/Ireland bilateral treaty on social security which might shed light but it's not for the amateur.

I had an unusual case like this a few years ago and DSP would not give me a straight answer in correspondence. I got my local TD to put down a parliamentary question on the topic and I got a clear answer then.

This is an interesting one. I wonder if anyone on the forum has tried it.

If possible, it would mean that voluntary UK contributions may still make sense, even after you've qualified for the full UK state pension - if it were to allow you to allocate your earlier, paid, contributions to the Irish system.

 

[Kev1964]

This is an interesting one. I wonder if anyone on the forum has tried it.

If possible, it would mean that voluntary UK contributions may still make sense, even after you've qualified for the full UK state pension - if it were to allow you to allocate your earlier, paid, contributions to the Irish system.

Exactly my point/ question.

I think I will continue paying annual NICS past full UK state pension entitlement stage as its only c£160 pa ...for now anyway.

 

[poorrelative]

Exactly my point/ question.

I think I will continue paying annual NICS past full UK state pension entitlement stage as its only c£160 pa ...for now anyway.

Very interesting idea...I guess you won't know for 7 years. Hopefully, someone on the forum will have tested this before then.

 

[ProRata]

Where one is already well covered in relation to securing a full or near-full UK new state pension entitlement (35 years), buying additional UK voluntary contributions may not make sense if the ultimate intention is to increase the rate of Irish-UK bilateral weekly pension entitlement under the pro-rata formula P x [ I / ( I + UK ) ] … where P is the notional weekly rate of Irish pension (based on the weekly rate band determined by the yearly average value of (I + UK) / Total Contribution Years), “I” is the number of “full-rate” Irish PRSI contributions (small ambiguity around if this means full-rate Class A PRSI only, or A + other full-rate reckonable contribution classes such as S and V1 in getting value of “I” … the latter I’m assuming … but don’t ever take anything for granted in interpreting wording when dealing with DSP) and “UK” is the number of ”reckonable” paid UK NIC’S (some ambiguity here also around whether UK voluntary NIC’s are excluded in determining “reckonable” NIC’s, though I was informed in a phone call to an official in Sligo DSP office some months back that voluntary UK NIC’s are indeed excluded in the denominator term in above formula).

Ambiguities aside, to increase the P x [ I / ( I + UK ) ] pro-rata Irish state pension payment a 1 year increase in “I” will increase the weekly payment value, whereas a 1 year increase in “UK“ voluntary NIC’s will (if I was advised correctly in my call to DSP) have no effect on the resulting payment.

What I find frustrating about the wording used on Gov.ie and Citizens Advice websites is that the case study numerical examples used do not cover anywhere near the full spectrum of common scenarios faced by many imminent retirees who have worked in both UK and Ireland and who do not meet the minimum 520 “full-rate” paid contributions threshold for Irish state pension eligibility … leaving state pension retirement planning open to unnecessary uncertainty…. and as I said already above the wording “full-rate” in defining “I” is open to ambiguity in interpretation !!!

 

[partnership]

I don't think that you can combine your ni contributions with your irish to be paid the 2080. My understanding is that you are only paid for the number of Irish contributions by way of a notional calculation. Example my oh will probably be short of the 520 stamps but has 5 or 6 years in Spain. If the total adds to more than the 520 he will get something based in Irish stamps in Ireland and then may get something in Spain. I would love to talk to a specialist in this area to understand it more.

 

[Kev1964]

I don't think that you can combine your ni contributions with your irish to be paid the 2080. My understanding is that you are only paid for the number of Irish contributions by way of a notional calculation. Example my oh will probably be short of the 520 stamps but has 5 or 6 years in Spain. If the total adds to more than the 520 he will get something based in Irish stamps in Ireland and then may get something in Spain. I would love to talk to a specialist in this area to understand it more.

I’m the OP on this and from subsequent enquiries that I’ve done I think it’s correct that overpayments of NICs will not count towards an Irish COAP.

For anyone who will not hit 2080 here it’s worth very your while getting your PRSI statement and investigating gaps and any errors. In my case I found 16 missing paid contributions back in the 80’s in the tax year I emigrated to the UK.

Missing credits were identified in 2019 and the DSP agreed to credit them. Now I’m looking at voluntary contributions to get as close to 2080 as I can. Best case scenario will be about 85% of the total. Not too bad when combined with the UK COAP.