Information on pension calculations after age 66.

[S class]

If a customer decides to defer their pension, will the years worked after age 66 be counted as part of their yearly average?

If a customer chooses to defer their pension, the number of extra years worked will add to the divisor for the yearly average. (e.g. if a customer has 50 years cons at 66, the divisor is 50, so the same customer will have 54 years cons at 70, but the divisor will be 54, and will bring down the yearly average.)
54 years is the maximum possible divisor. (Started in employment at age 16 and deferrs pension to age 70).



Can a customer continue to pay voluntary contributions after age 66 if they defer their pension?

As there are different classes of voluntary contributions, with only some counting towards the State Pension, it is best to check with the Waterford team on this, as they can answer this question with consideration to individual circumstances. The team can be contacted at (01) 471 5898 or 0818 690 690.



If a customer deferred their pension, are the contributions paid in the year they make their application counted?

If you are calculating using Total Contributions (%age of the 2080 cons), these contributions will be counted. All contributions up to the 66th birthday or the deferred Drawdown date will be counted.



If you are calculating your pension using the Yearly Average method, these contributions are dealt with differently. These cons are only counted if they are needed to bring the customer up to 520 contributions (the minimum number of contributions needed in most cases for a Contributory Pension).

• For example, if a customer is 66 on 1/6/2024, their contributions are counted until 31/12/2023 (the previous tax year). If the customer has over 520 contributions at that point, the contributions from January to June are not counted.
• If a customer has under 520 cons at 31/12/2023, then the contributions from January 2024 to 1st June 2024 are counted to see if it will bring them up to the 520 cons and therefore be eligible to qualify for the State Pension Contributory.
• This will work the same way if that same customer defers to say 68 years of age and the Drawdown date is now 1/6/2026.
• The contributions between January 2026 and 1/6/2026 will only be counted to satisfy the requirement of 520 cons. If the person already has 520 contributions or above by 31/12/2025, the contributions between January 2026 and 1/6/2026 will not be counted.

 

[S class]

Using the info above....

A person reaching age 66 in 2024 with a divisor of 50 and 950 cons would have an average of 19.

If they retired this year they would qualify for a pension of 180.70 euro per week.

If they deferred their pension to 1st January 2025 and gained an extra 45 cons they would then have a divisor of 51 and 995 cons and would have an average of 19.5.
This would be rounded up to 20 and they would qualify for a pension of 236.10 euro per week. They would have to factor in the loss of 10% of the difference between their total cons method calculation because of the phasing out of the averaging calculation method.

This would reduce their pension by approximately 10 euro to 226.00 euro per week.

They would gain an extra 2355 euro in their yearly pension.
They would loose up to one years pension, a maximum loss of 9396.40 euro.
The maximum break even time would be approximately 4 years.
This time would be much shorter if their birthday falls later in the year.

There is a larger gap in pension payment between average 10 (110.80 euro) and average 15 (180.70 euro), so there is an opportunity for a person nearing average 14.5 to deferr their pension claim.

If you are claiming the contributory pension shortly and are advantaged by the averaging calculation method it would be well worthwhile getting out your calculator and your Prsi contributions record and doing some homework.

This information could be of advantage to pre 95 public sector workers who have taken early retirement.

 

[S class]

The Operational quidelines for voluntary Prsi are still showing that only people up to age 66 are eligible.