# Does state contributory pension discriminate against early starters/ broken record?



## breege (18 Sep 2012)

From the 1st of September last, a person applying for the state contributory pe sion needs a yearly average of 48 PRSI contributions to get the full pension.
They are averaged from the year they started paying PRSI.

This change will adversly affect many workers who started work early, ie in their teens and have a broken record of employment.  The type of work record of many woman now approaching retirement age.  
Home credits were only introduced in 1994 and were not backdated.

A person could have contributed for nearly 40 years and still not get a full pension.  However, someone who starts paying PRSI in their mid 50s and continues for 10 years will get the full pension.

Normally the longer you are in a pension scheme, the greater the benefit, but not in Ireland, which rewards late payers!


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## Annie51 (18 Sep 2012)

I agree with you.  My sister has worked for 48 years but after she got married she worked in the family business and did not receive any credits for almost 20 years with the result that her pension will be reduced by €35 per week.  If she has claimed dole for 35 years and worked for the past 10 years then she would be entitled to a full pension, crazy country...


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## Protocol (19 Sep 2012)

That requirement for a 48-week average isn't new.

Here are the recent changes:

http://www.welfare.ie/EN/Pages/pensionchanges20122013.aspx

http://www.welfare.ie/EN/Schemes/Pension/Pages/statepensionchanges.aspx


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## Clohass (19 Sep 2012)

I thought that the averaging was to a max of 30 years at 48 Contributions/Credits so therefore if you have 1440 Credits/Contributions over your working life you qualify for the max rate contributary Pension?

I'm open to correction/Clarification on this?


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## Protocol (19 Sep 2012)

It's complex.

http://www.welfare.ie/EN/Schemes/Pension/Pages/spc.aspx#Rules2


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## Protocol (19 Sep 2012)

*3. Average number of contributions per year*

You must meet the average condition. This is probably the most complex aspect of qualifying for a State Pension (Contributory).

*Normal average rule*

The normal average rule states that you must have a yearly average of at least 10 appropriate contributions paid or credited from the year you first entered insurance or from 1953, whichever is later. An average of 10 entitles you to a minimum pension; you need an average of 48 to get the maximum pension.


*Alternative average rule*

This alternative average only applies to people who reach pension age on or after 6 April 1992. 
It requires that you have an average of 48 Class A, E, F, G, H, N or S contributions (paid or credited) for each contribution year from the 1979/80 tax year to the end of the tax year before you reach pension age (66). This average would entitle you to the maximum pension. There is no provision for a reduced pension when this alternative average is used.
So, if you reach the age of 66 on or after April 6 1992, your average will be looked at in two ways - the usual average will be assessed and the alternative average will be assessed. Most employed or formerly employed people will be able to meet the alternative average. The alternative average will probably be looked at first because it is easier to assess. If you do not have an average of 48 contributions from 1979 then the normal method of assessing the average will be looked at and you may get a reduced pension (if you do not meet the alternative average, it is virtually impossible for you to have an average of 48 using the normal average rule).


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## breege (19 Sep 2012)

Protocol
Until this month, if you had an average of 20-48 contributions, you pension was only reduced by 4 euros, and the rate for dependents was not reduced.  Now, there are different bands for both the pension and dependents.  Someone with an average of 20-29, their pension will be reduced by approx 15% and the dependent rate will also be reduced.


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## breege (19 Sep 2012)

Clohass, the requirement of 30 years paid contributions, for a full pension, applies from 2020.  If I was retiring then, I would be fine.  Obviously, the total number of contributions made is the fairest method of calculating your pension.

My work history would be similar to many women approaching retirement.

 I started work after my leaving,  first child born 1979 so stopped work until the mid 90s, when I returned to the workforce.  I will have over 30 years paid contributions by the time I reach 66, but as I understand it, will be denied a full pension due to being averaged from 18.  
My friend, similar work pattern.  But the pre children work years were in England.  She returned here in her 40s.  In recent years has been working and will have 12 years contributions at retirement. She will qualify for the full irish pension and she reckons a UK 
pension also.


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## Protocol (20 Sep 2012)

http://www.welfare.ie/EN/Schemes/Pension/Pages/spc.aspx#Rates3

Yes, since Sep 2012, the rates of SP for people with less that the 48 wk average have been reduced.


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## thespecialon (21 Sep 2012)

And whats even worse in my view, the plan to merge the pensions , so people who never contributed will get the same as people who did...Great incentive to work again!


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## breege (21 Sep 2012)

Protocol,
How would the alternative average apply to me?  I dont understand it.

I stopped work during the 79/80 tax year.  I was at home, child rearing, until the mid 90s.

Will my average be calculated from when I returned to work in the 90s until I retire at 66?


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## Black Sheep (21 Sep 2012)

Sorry to disappoint you but your average will be calculated from the date you started work, not the date you returned to work
Lets say:-
1970 - 1980 employed
1980 - 1995 Homemaker
1995 - 2016 employed

Total working life 46 years.(1970 - 2016) 
Total contributions paid (31 years x 52) =1612 divided by 46 = 35 yearly average.
Pension at current rates 207.00 pw.

The yearly average does not apply in your case as you would need to have been in continuous employment from 1979 to pension age
The above is just by way of example and not intended to age you


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## breege (22 Sep 2012)

Thanks for that Black Sheep.  So the normal average or the alternative average results in a pension 10% less than my friend with just a third of my contributions.

To return to my orginal question, are the changes discriminatory in that they will mainly affect woman and what can we do about them?


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## Black Sheep (24 Sep 2012)

Pensions have always been calculated based on the number of paid contributions. The fact that women have traditionally been the homemakers affects their pensions adversely. As more men are becoming homemakers their pensions will be affected in the same way.

In 1995 the Homemakers credit system was introduced which goes some way towards improving the Homemakers chances of full pension


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## David_Dublin (26 Sep 2012)

Where does one go to find out if they qualify for a contributory (transition) or full? Can you ring up with your PPS number to check how many stamps you have to give you some idea of what the likelihood of an application will be?


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## gipimann (26 Sep 2012)

You can request a copy of your Social Insurance record by completing this online form:

https://www.welfare.ie/EN/Secure/Pages/RequestAcopyOfYourSIContributionsRecord.aspx


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## David_Dublin (26 Sep 2012)

Thanks gipimann


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## breege (26 Sep 2012)

Home credits were introduced in 1994 and are not backdated.  A person retiring this year would have been 48 then and it is likely that any time spent in the home rearing children would have mainly occurred prior to that age.

Aside from the discrimination issue, does it make sense given the financial mess we are in, to pay a full pension to someone who has only contributed for 10 years?


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## sparky11 (27 Sep 2012)

Another issue to look at here is that if a pensioner had a yearly average of 25 contributions and became pension age in August then payment is E225 (max is E230). However if you become pension age in September and have an average of 25 contributions then payment is only E196. How can this be justified??.


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## djh (5 Oct 2012)

This thread got me thinking, and I got a copy of my Benefit Statement in the post recently, wo I have been out with the calculator. 

I did what many kids did in school and in college, took a part-time/weekend job to pay my way. These gave me a mix of class J and class A. 
Saved as much as I could and did a full time post-grad course. This that gave me with 3/4 years with no contributions. 

So, because I entered employment starting with a couple of A class contributions when I was 16-20 years old (with lots of J class) my record starts then. 
With only a few A contributions in those years, and then no contributions during full time education years it really lowers the Yearly Average. 

From my reading of it all, in terms of my ultimate pension entitlements I would have been better off not working at all until I was ready to enter full time employment.
(that said, without working I'd not have been able to put myself through school/college).

Just throwing that out there to show that anyone who worked early in life can be seriously disadvantaged as well. 
It's very easy to forget that those weekend jobs, and not realise that history can work against you.


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## Janet (5 Oct 2012)

I did the same.  Received an envelope yesterday, saw the harp on it and immediately thought, "oh sugar, what have I done now!" - that says something terrible about me I'm sure but none of it's true, I promise.  

I still haven't quite got to grips with it but did add up everything and came to a bit over 900 contributions in total.  I know it's the averages that count but it still gave me a warm fuzzy feeling to have that many.  Since I don't live in Ireland anymore, I'm not expecting a full pension anyway but it'd be nice to get something after paying in for years.  Have to take a trip to the German pension advice place now and get the details added to the system here - from what I understand I won't get "credit" for what I've paid in in Ireland but I can use the number of contributions to satisfy minimum numbers of contributions here for various things.


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## Black Sheep (5 Oct 2012)

With 900 contributions paid in Ireland it appears you may be entitled to a pension of 150.00pw. or more at age 66 depending on when you made those contributions.
Further information would help to get a more accurate reply


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## Janet (7 Oct 2012)

Black Sheep said:


> With 900 contributions paid in Ireland it appears you may be entitled to a pension of 150.00pw. or more at age 66 depending on when you made those contributions.
> Further information would help to get a more accurate reply



Between 1991 and 2008.  I have another nearly thirty years to go before hitting 66 though so I have plenty of time to figure it all out yet.


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## Black Sheep (9 Oct 2012)

And by then Retirement age will be 95!!!


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## seantheman (9 Oct 2012)

And €150 will buy you a copy of Die Zeit


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## djh (9 Oct 2012)

Just thinking about this a little more, 
Does anyone know if it is possible to make contributions for past years of no employment/study or for years with the wrong sort of contribution (class J), in order to complete your record?


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## Black Sheep (9 Oct 2012)

Sorry but that record is nailed down in tablets of stone and is not for turning!!


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## djh (10 Oct 2012)

Hi Equal, 
I had a look at student credits, and it says they can only be claimed once, and only for short term welfare payments (they don't say what they are). Would the state pension not be a long term pension?


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## Black Sheep (11 Oct 2012)

I think there may be some confusion here regarding paid and credited contributions. 
Student credits may be used to a help young person to qualify (who otherwise would not have sufficient paid contributions) for short-term payment such as jobseekers benefit.

djh seems to have paid contributions while a student which will now be taken into account for pension.


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