Qualifying for the state pension - requirements

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Blackrock1

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I cant remember if this was answered before, but my wife has worked full time for the past 15 years or so, and been a higher rate tax payer for most of that. In the future we may look to cut down on this or even have her take a career break.

I am mindful of the value of the state pension, with the above in mind what do we need to consider to make sure she is entitled to a full state pension on retirement (if such a thing exists at that point)
 
Currently to get a full State Pension she would need an average of 48 weekly contributions per annum over her PRSI history.
However there are plans to change the calculation in the next 2 to 3 years. The proposal is to move to a 1/40th for each year of PRSI contribution. So history of 40 years contributions (including credits) would be required to get the full pension.
 

sorry i dont get the first point, does it mean you need to make 48 weekly contributions on average from the day you start work until you retire?

and on the proposal mentioned the euro value of contributions dont matter just that you are making contributions?
 
Blackrock
Under the current rules, the main conditions you need to qualify for a full State Pension are:
- paid a minimum of 520 (10 years) contributions , and
- have an average of a least 48 contributions per annum over your PRSI history ( from when you first started paying PRSI and up to the December before your 66 birthday).
If the average is less, then the State Pension is reduced. So for example, if the average is between 40 and 48, then you get a 98% Pension . If the average is between 30 and 39, you get 90%
 
Probably worth noting that we are due to move to a total contribution approach from next year -

State Pension (Contributory) pre 2025

The State Pension (Contributory), previously called the old age pension, is paid to people aged 66 and over, who have worked and paid enough social insurance contributions. This page is for people who were born before 1 January 1959 and did not defer claiming their State Pension (Contributory).
www.citizensinformation.ie
 
Sarenco
We were due to move to a TCA next year, but I understand that this is now not likely to happen until perhaps 2022.
 

so a person retiring in 2023 will be assessed for pension based on 40 years of contributions, homemakers will get a credit for 20 years of child rearing while outside the workforce? This will be a significant change and will mean that many people from 2023 will not qualify for a full state pension. I can imagine when the reality of this hits home there will be enormous pressure to extend the special "homemakers credit" to many more groups.
However currently even if you dont have full prsi contributions you are not heavily penalised you still get most of the pension anyway. What if they also changed this gradation to be linear in that if you only have 20 years full contributions you get only half the full state pension?
 
Under the proposed TCA system you would get 1/40th of a State Pension for each year of contributions (or credits). The Homemaker credits have been changed more recently so that those out of the workforce minding children can now get credits for years prior to 1994.
So the TCA system Will be more equitable. Perhaps the Minister will hit the Q3 2020 target, but it's not what I am hearing from Dept sources.
 
Conan said:
Perhaps the Minister will hit the Q3 2020 target,
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you can see why they didn't bring this in sooner, they want to get it by the next election, it will be highly unpopular, of course most people not being numerate don't realise the implications yet. The same thing happened after the 2012 changes , there wasn't a whimper until people actually began receiving their pensions.

Conan said:
So the TCA system Will be more equitable
Click to expand...

yes but there will be no beneficiaries , people that are highly advantaged by the current system, namely people that only started working in ireland much later in life will now have that advantage removed again
 
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They might put in an option of buying back years.similiar to UK system.
 
One of the inequities of the current system is that it is possible to get a full State Pension with only 10 years of contributions (if you first entered the PRSI system at say age 55). Meanwhile someone with a 40 year history, but with a gap in their record, would perhaps not get a full Pension. The TCA proposes a strictly proportionate payment. More equitable.
 

Sorry but can I ask a question about the "average contributions"??
I'm 52 now and am currently fully retired from paye employment since I turned 50 and am now making voluntary PRSI contributions.
I started working as soon as I turned 16 in my family's business, so does the average rule of 48 contributions per annum apply to me or someone who started working early right up to the current retirement age of 68 ??
 
Blackrock
Yes, but the system is due to change in the next few years. But you should continue to pay contributions or sign on for credits (If possible).
 

By the time you will retire, the total contribution approach.will be well in place. I have seen the figure 40 years floating about but I think it will be far lower.possible 35 or 30 years. Currently half the country.rely.sorely on the.state.pension and given Ireland's past.history.of high.unemployment.and.high emigration, The 40 year reqyirment.of full prsi.contributions would.be.near impossible.for hundreds.of thousands of people.
 
Saavy99 said:
The 40 year reqyirment.of full prsi.contributions would.be.near impossible.for hundreds.of thousands of people.
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also the immigrant council of ireland will have alot to say as the current system is actually very beneficial to immigrants although i would say that very few have actually reached pension age yet so have not benefited from this anomoly.
But the current system is unsustainable, at least this measure will make the pension system fair, at least this is better than means testing the pension and denying someone that has made 40 years of contributions a full state pension. There are alot of difficult decisions for politicians to make in the next decade
 
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