State Contributory Pension -New Rules

[dubman1]

Changes to the State Pension (Contributory) in Ireland

Changes to the State Pension including access to pensions for long-term carers

www.gov.ie

The latest update above appears on the Departments website dated 02 Jan. 2024.

It then qualifies its new regime starting in Jan 2025 for Total Contributions by saying terms and conditions will apply as per forthcoming legislation.
Is anyone aware of the current status of the legislation and a reference to it.?

Also while the new approach will be phased in over ten years starting in 2025 ,it does not specify the proposed terms and conditions. If a person retires from the Public service next year do they lose the full year of 10% or is the calculation rounded up or down according to the placement of their birthdate during the year?

 

[Clamball]

I think the terms and conditions are pretty clear. The dept. already have lots of info on how the TCA and yearly average methods are calculated and they do both, and give the pensioner the higher amount.

What they will do now is still calculate it both ways, but not give the higher amount.

In 2025 it will be 90% the yearly average plus 10% the TCA,
Or it will be the figure based on the TCA if that is higher.

.

 

[Allpartied]

I think the terms and conditions are pretty clear. The dept. already have lots of info on how the TCA and yearly average methods are calculated and they do both, and give the pensioner the higher amount.

What they will do now is still calculate it both ways, but not give the higher amount.

In 2025 it will be 90% the yearly average plus 10% the TCA,
Or it will be the figure based on the TCA if that is higher.

.

This is subject to change as legislation has not been passed to put this into effect.
They really shouldn't be putting any information in the public domain, which has not been fully implemented by legislation.
During the course of debates and other parliamentary procedures a whole host of changes could be accepted.

Plus we could well have an election before January 2025, so who knows what will happen.

 

[Marsupial]

This is subject to change as legislation has not been passed to put this into effect.
They really shouldn't be putting any information in the public domain, which has not been fully implemented by legislation.
During the course of debates and other parliamentary procedures a whole host of changes could be accepted.

Plus we could well have an election before January 2025, so who knows what will happen.

So you think that the Department shouldn't provide any information to help PRSI contributors to calculate their likely State Contributory pension, even though the relevant website clearly states as follows:

Please note

---

Terms and conditions will apply, as per forthcoming legislation


Perhaps you'd prefer them to add a note along the following lines:

Please note

---

In the event that Sinn Féin (a) becomes the next Government and (b) honours its leader's often repeated pledge, the State Contributory Pension will be available at age 65, so everything that follows this paragraph will need to be rewritten. Sorry about that!

 

[Allpartied]

So you think that the Department shouldn't provide any information to help PRSI contributors to calculate their likely State Contributory pension, even though the relevant website clearly states as follows:

Please note

---

Terms and conditions will apply, as per forthcoming legislation


Perhaps you'd prefer them to add a note along the following lines:

Please note

---

In the event that Sinn Féin (a) becomes the next Government and (b) honours its leader's often repeated pledge, the State Contributory Pension will be available at age 65, so everything that follows this paragraph will need to be rewritten. Sorry about that!

So, basically no-one can calculate their state pension, they can only calculate a possible state pension.
They've been blathering on about this for years.
Maybe just put the legisation into effect, with whatever changes are agreed. Then set up a longer implementation period, then give people the opportunity to make back dated payments, then set up an app which allows every citizen to get an accurate forecast of their state pension, then offer them a pathway to improve that forecast if they want to.
Anyone who has been applying for a UK state pension, on the UK Govt Gateway , will know what I am talking about.

 

[Marsupial]

So, basically no-one can calculate their state pension, they can only calculate a possible state pension.
They've been blathering on about this for years.
Maybe just put the legisation into effect, with whatever changes are agreed. Then set up a longer implementation period, then give people the opportunity to make back dated payments, then set up an app which allows every citizen to get an accurate forecast of their state pension, then offer them a pathway to improve that forecast if they want to.

No one has ever been able to able to calculate their state pension with 100% accuracy, as there has always been the risk that the eligibility criteria and regulations could be changed before one's pension day arrived - so no change there! Bear in mind that it's not long ago since The Social Welfare Act 2020 repealed the plan to increase the pension age to 67. That certainly put the kibosh on my - and many others' - careful calculations, albeit in a good way!

I assume that you made Commission on Pensions aware of your other views when it invited submissions from the public back in 2020-21.

 

[Lisgoold]

In an attempt to calculate my figure, and to see if I'm understanding the upcoming changes, do you think these figures are correct.

Leave aside future yearly increases, and assuming the 10 year transition goes ahead!

I reach 66 in December 2025. My total number of contributions is 887. My average , based on first year paying PRSI, and reaching 66, is 25.

So, I think, if I was hitting 66 this year, I would get €236.10.

When I actually reach 66, next year, I'd get 90% of that, plus 10% of the TCA method. So I make that 212.49 plus 11.78, so €224.27.

If I were around ten years younger, and the new method was fully in by the time I hit 66, I'd get around 42.5 % of the full pension, so around €117.85.

Am I understanding this correctly?

 

[Marsupial]

I reach 66 in December 2025. My total number of contributions is 887. My average, based on first year paying PRSI, and reaching 66, is 25.

When I reach 66, next year, I'd get 90% of €236,10 plus 10% of the TCA method. So I make that 212.49 plus 11.78, so €224.27.

Am I understanding this correctly?

You are understanding it correctly, however I think that your calculation of the 10% of the TCA may be wrong.
I think that the calculation is (887/2080*236.10)*10% which doesn't equal €11.78. But the difference is only about €1.

 

[Lisgoold]

You are understanding it correctly, however I think that your calculation of the 10% of the TCA may be wrong.
I think that the calculation is (887/2080*236.10)*10% which doesn't equal €11.78. But the difference is only about €1.

Thank you. That's good.
I thought I had to calculate the remaining 10 per cent , as ten per cent of what I'd get under the new method , which, I think , would be 117.85?? Hence me arriving at 11.78.

 

[Marsupial]

Thank you. That's good.
I thought I had to calculate the remaining 10 per cent , as ten per cent of what I'd get under the new method , which, I think , would be 117.85?? Hence me arriving at 11.78.

You may very well be right (in which case my spreadsheet is wrong!).

I didn't look at your 10 year projection, but in essence the objective is that if someone has made only 42% of the maximum number of reckonable PRSI contributions then they should get only 42% of the full contributory pension. (Which makes sense to me!)

 

[Lisgoold]

Depends if they round the percentage up or down I guess, but 42 per cent would be @11.64 I think.

Hopefully that's how it pans out. I'll report back next year!

 

[BrianMc]

In an attempt to calculate my figure, and to see if I'm understanding the upcoming changes, do you think these figures are correct.

Leave aside future yearly increases, and assuming the 10 year transition goes ahead!

I reach 66 in December 2025. My total number of contributions is 887. My average , based on first year paying PRSI, and reaching 66, is 25.

So, I think, if I was hitting 66 this year, I would get €236.10.

When I actually reach 66, next year, I'd get 90% of that, plus 10% of the TCA method. So I make that 212.49 plus 11.78, so €224.27.

If I were around ten years younger, and the new method was fully in by the time I hit 66, I'd get around 42.5 % of the full pension, so around €117.85.

Am I understanding this correctly?

And is it correct to say, that if you had zero contributions, the 10 year younger version of you would receive €266? (based on the current non-contributory rate).

I am still trying to get my head around how a person that does not contribute to the new system will get more than someone who has worked for 35 years.

 

[Conan]

And is it correct to say, that if you had zero contributions, the 10 year younger version of you would receive €266? (based on the current non-contributory rate).

I am still trying to get my head around how a person that does not contribute to the new system will get more than someone who has worked for 35 years.

The non-contributory pension is means tested. Someone who has worked for 35 years will likely have other assets.

 

[dubman1]

Every Public Sector worker who is post 1995 entrant and due to retire in the next 10 years is in for an unpleasant surprise if they do not have enough PRSI contributions to gain a similar pension they would be currently entitled to under the combined approach.
Leaving aside the fairness or unfairness this is likely an electoral minefield the government is planting for itself.
I do not think that any of the Public Sector Unions are aware or paying any attention to this one.
If this comes in on January 2025 and there is an election in March that is enough time for retiring Public Servants to spread panic among the rest of the Public Service.

 

[BrianMc]

The non-contributory pension is means tested. Someone who has worked for 35 years will likely have other assets.

How is that relevant?

My point is, that if a person chooses not to work they could possibly end up with a weekly payment that is greater than someone that has put in many, many years.

 

[Forumuser]

How is that relevant?

My point is, that if a person chooses not to work they could possibly end up with a weekly payment that is greater than someone that has put in many, many years.

That person can always apply to the NC pension and get the same rate as your man- under the condition that he has no assets cutting the NC pension down in a means test.

 

[Chatterbox]

Every Public Sector worker who is post 1995 entrant and due to retire in the next 10 years is in for an unpleasant surprise if they do not have enough PRSI contributions to gain a similar pension they would be currently entitled to under the combined approach.
Leaving aside the fairness or unfairness this is likely an electoral minefield the government is planting for itself.
I do not think that any of the Public Sector Unions are aware or paying any attention to this one.
If this comes in on January 2025 and there is an election in March that is enough time for retiring Public Servants to spread panic among the rest of the Public Service.

I think they can apply for supplementary pension to bring to par with similar grade/service class D officer .They would have to claim any social welfare entitlement first