# Implications of being unemployed for a while ?



## Mochac (4 Nov 2014)

Hi, 

I have been made redundant and have never been unemployed before and I am wondering what are the implications of being unemployed for a while ? The only thing I could think of myself was that I had lost my private health insurance and that I would have to take out my own. Is there anything else?

- People advise to sign on immediately, why is this ? What happens if you delay for a while ?
- Someone suggested that being out of work for too long could jeopardize your entitlement to the state pension, what are the rules on this?  Or is everyone entitled to a state pension when they hit the age limit ?
- Is there anything else ? 

I got a redundancy payout so I am not under any immediate financial pressure.  I am hoping to get a new job before too long. I could actually use a couple of weeks break to sort things out though, but I just want to be sure there would be no major implications to being without work for a month or so ?

Thanks, 

Mochac


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## Monbretia (4 Nov 2014)

Sign on immediately, this preserves your unbroken record of contributions towards your pension both paid and credited.   There is no benefit from waiting, it will run out anyway and Social Welfare expect you to sign on as soon as you are jobseeking.

Now if you are not jobseeking that is a different story but in reality you are unlikely to find a job next week (maybe I'm wrong!) so will quite probably have all the spare time you want without delaying signing on straight away.

Everyone doesn't automatically get a pension, it depends on the amount of contributions so there is no point having a break in them if not necessary.

Hopefully you will be successful in your job hunt and not be out of work too long.


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## Setanta12 (4 Nov 2014)

You cannot backdate signing on, so any delay will cost you. I did think there might have been some shame in it when I was younger, until I had dependents and responsibilities.


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## Protocol (4 Nov 2014)

Mochac said:


> Hi,
> 
> I have been made redundant and have never been unemployed before and I am wondering what are the implications of being unemployed for a while ? The only thing I could think of myself was that I had lost my private health insurance and that I would have to take out my own. Is there anything else?
> 
> Mochac



You don't *have *to buy health insurance, it's optional.

Everybody is entitled to public hosp care.


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## Protocol (4 Nov 2014)

Mochac said:


> - Someone suggested that being out of work for too long could jeopardize your entitlement to the state pension, what are the rules on this?  Or is everyone entitled to a state pension when they hit the age limit ?




State pensions are not automatic, no.

They depend on PRSI contributions.


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## Mochac (4 Nov 2014)

Monbretia said:


> Sign on immediately, this preserves your unbroken record of contributions towards your pension both paid and credited.



I guess this is the part that I'm not understanding, while working I was contributing via my PRSI but now that I'm unemployed I am no longer making any contributions, so how will signing on change this? Do they treat your time when you are signed on as though you are still making contributions even though you aren't really ?


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## Mochac (4 Nov 2014)

Protocol said:


> State pensions are not automatic, no.
> 
> They depend on PRSI contributions.



Does anyone have a link explaining what exactly the relationship between PRSI contributions and sate pension entitlements are then ?  Could being unemployed for a month between jobs have a significant impact ?


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## Monbretia (4 Nov 2014)

You make a paid prsi contribution when you are working, you get a credited one each week while you are drawing a social welfare payment.  This is how your record of payments is preserved.

Your pension entitlements are based on your average number of prsi contributions over your working life so total divided by number of years from starting work to retirement so any missing ones lowers the average and can affect the weekly amount you get.  This is a simplified explanation as the rules have changed lately and could change again before you reach retirement which is why you should take every opportunity to maximise the number of contributions you have.

http://www.citizensinformation.ie/e...etired_people/state_pension_contributory.html


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## Gerry Canning (5 Nov 2014)

Mochac; 

As advised, sign on for Jobseekers benefit immediately.I think you get 7 mths unemploymen,(dole) as of right.
 By signing on maintain your old age pension contributory rights.
You will probably find the monthly going to Social Welfare office very very depressing ,so hopefully you will get work soon. 
Good luck.


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## Protocol (5 Nov 2014)

Mochac said:


> Does anyone have a link explaining what exactly the relationship between PRSI contributions and sate pension entitlements are then ?  Could being unemployed for a month between jobs have a significant impact ?




http://www.welfare.ie/en/Pages/State-Pension-Contributory.aspx


A 1 month gap shouldn't have any impact, no.


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## Protocol (5 Nov 2014)

Mochac said:


> Does anyone have a link explaining what exactly the relationship between PRSI contributions and sate pension entitlements are then ?  Could being unemployed for a month between jobs have a significant impact ?




To qualify for a State Pension (Contributory) you must be aged 66 or over and have enough Class A, E, F,G, H, N or S social insurance contributions.

You need to:


Have paid social insurance contributions before a certain age
Have a certain number of social insurance contributions paid and
Have a certain average number over the years since you first started to pay

*1. Paid insurance before a certain age*

You must have started to pay social insurance before the age of 56. (The age limit is higher for people born before 1922.)

Entry into insurance

Your entry into insurance means the date on which you first started to pay social insurance.

The rules that determine when you entered into insurance are quite complex for those with mixed insurance, that is, full social insurance for some of the time and modified at other times.

Normally the date of starting insurable employment is taken as the date of the first paid employment contribution.

However if you have a mixture of full- and modified-rate contributions and paid your first full-rate employment contribution before 6 April 1991 and before you reached 56 years of age, your entry into insurance can be the date on which you first started to pay the full-rate of insurance if that would be to your advantage.

If you started to pay full insurance after 6 April 1991, your entry into insurance is the time you first paid any social insurance.

There are also special entry into insurance rules for self-employed people. If you started to pay self-employed contributions on 6 April 1988 and had previously paid employee insurance at any time, then the date of entry into insurance can be either 6 April 1988 or the date on which you actually first paid insurance, whichever is to your advantage.

*2. Number of paid contributions*

If you reach pension age on or after April 6 2012, you need to have 520 full-rate contributions (10 years contributions). In this case, only 260 of the 520 contributions may be voluntary contributions.

However, if you were a voluntary contributor on or before April 6 1997 and you have a yearly average of 20 contributions, you may meet the requirement if you have a total of 520 full-rate contributions (of which only 156 need to be compulsory paid contributions).

If you reached pension age on or after 6 April 2002, you needed to have 260 full-rate contributions (effectively 5 years contributions but they need not be consecutive).

If you reached pension age before 6 April 2002, you needed 156 qualifying full-rate contributions (a total of 3 years but they did not have to be consecutive).

Note that social insurance contributions fall into the four groups below.

Full-rate social insurance contributions are PRSI contributions at Classes A, E, F, G, H, N and S or at the 'ordinary' rate before 6 April 1979.
Modified-rate social insurance contributions are PRSI contributions at Classes B, C and D (paid by civil and public servants).
Voluntary contributions are made by people under age 66 who are no longer covered by compulsory PRSI provided they satisfy certain conditions.
Credited contributions ('credits') are similar to the social insurance contributions you pay while employed and are usually awarded at the same rate as your last paid social insurance contribution. You may get credits when you are claiming a social welfare payment. Credits are not allowed after self-employed contributions (Class S).

*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 to the end of the tax year before you reach pension age (66). 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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## Black Sheep (5 Nov 2014)

A 1 month gap could have quite an affect on pension or other SW entitlements.

One case I dealt with recently the client was 1 PRSI payment short for Maternity Benefit (38 instead of the required 39).  

Another 38 instead of 39 for Invalidity Pension and a third lady was also 1 payment short for a higher level of pension. It now costs her €50 a week (shortfall)


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## Steven Barrett (5 Nov 2014)

You are supposed to sign on within 3 days of being unemployed (I think) and they don't have to back date contributions. You collect your dole money at the post office but have to sign on once a month at the welfare office. This is the soul destroying part of being unemployed. They usually only have 2 people working behind the counter so you have to queue for hours to sign your name on a piece of paper and leave. 

Get looking for work immediately. It doesn't take long for the months to go by and next thing your dole is gone and you've spent your redundancy. For most industries, it's still an employers market and they can leave you a month before getting back to you. 

Best of luck with everything. 


Steven
www.bluewaterfp.ie


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## Black Sheep (5 Nov 2014)

As you say it is soul destroying to be unemployed and then loose any shred of dignity by having to queue up sometimes in the rain to sign for payment, but to refer to it as dole creates an even further indignity. 

Jobseekers Benefit is the payment for the first 9 months and Jobseekers Allowance (otherwise known as dole) follows if eligible. People seem feel a greater stigma when being referred to as being on the dole when they are on Benefit


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## eastbono (6 Nov 2014)

SBarrett... I dont know where you are signing once a month for jobseekers benefit but nobody queues for hours... the queue for jsb is usually very short.  Jobseekers allowance is a much longer queue but nobody waits for hours either.


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## DMcL1971 (6 Nov 2014)

When I was on jobseekers benefit the monthly wait to sign on was usually 5-10 minutes. You then collected your cash every week at your local post office. You only have to sign on for jobseekers allowance once a year, however the queue for that can be a couple of hours.


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## Drakon (7 Nov 2014)

I quit my job a couple of years ago and signed on for JSB. I had to sign on once a month; no queue. I collected once a week; no queue.  €188 and loads of free time, it was great. 
Also, the first payment was back dated for a few weeks so I was handed close to a grand. There was a wine sale on in Dunnes so I stocked up.
Don't knock it!


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## Setanta12 (7 Nov 2014)

The first time I signed on, I delayed in signing on and was penalised.  (Never again!)  I also had to sign on in Carlow where, IIRC, waits of 30-minutes were common and the queue snaked around the office out the door onto the pavement. (This was a few years ago)


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## JobseekGgrrs (7 Nov 2014)

Firstime posting/longtime reader, Hi All.

I have a few gripes about recruiters and sharp-practices and I plan on opening a thread for others to share horror stories when I build up posting-privileges.

My advice here is to take all that you are entitled to as you could be longer out of work that you think.


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## Gerry Canning (7 Nov 2014)

Black Sheep. I hear you on calling JSA (Dole) ,but that is what it continues to be commonly referred as. I also agree this does not help anyones dignity.

Drakon. Glad to hear you found JSB somewhat beneficial. You are in a minority?

DmcL 1971.Seems strange you state JSA sign on once a year ? are you correct?


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## Monbretia (7 Nov 2014)

I don't think Jobseekers Benefit is commonly referred to as dole, I usually hear it called being on your stamps with Jobseekers Allowance referred to as dole.  

Most people in either situation know the difference, it's a small one but you have paid for your 'stamps'.


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## Drakon (8 Nov 2014)

Gerry Canning said:


> Drakon. Glad to hear you found JSB somewhat beneficial. You are in a minority?
> 
> 
> > Dunno.
> > Though there are some people on JBA more-or-less permanently so probably not.


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## Mochac (8 Nov 2014)

Kildavin said:


> The first time I signed on, I delayed in signing on *and was penalised.*



How were you penalised ? I'm going to read up on the links posted here today and then I guess I'll sign on on Monday but I'll already be a week late.


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## Monbretia (8 Nov 2014)

Probably penalised in that the claim will not be backdated to date of finishing work if you don't go in immediately.

There is nothing to be gained in delaying.


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## Mochac (8 Nov 2014)

Protocol said:


> welfare/en/Pages/State-Pension-Contributory.aspx
> 
> A 1 month gap shouldn't have any impact, no.



Hi Protocol, 

I have read through that link but I still have questions: 
(i) The Alternative Average rule states:
_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)._
But it fails to define the term '_contribution year' , _does this mean 
(a) each year in which you make a contribution or 
(b) every year from the year you make your first contribution till you are 66 ? 
So for example is someone who works from age 26 to 66 much better off than someone who works from 16 -> 36 and then again from 46 to 66 ? Both would have 40 full years of contributions but depending on how _contribution year _is defined the second person may have an average of 52 (_contribution year = any year in which a contribution was made) _or _52*40/50 = 41.6 _(_contribution year = every year from year in which a contribution was first made).

_(ii) Is there any provision for credits for people in education ? Again depending on the definition of 'contribution year' it seems that the system may penalize people who re-enter education. eg. I am redundant after 10 years and go back to college for a couple of years to improve my prospects. Does this just drag my average down or is there some sort of credit I can get similar to what I would get while on JSB ? 
Related to this is the question of 'Voluntary contributions', if there is no credit while in education and it is dragging your average down can you make voluntary contributions to maintain your average and, if so, at what rate given that you are no longer actually getting paid?

Thanks, 

Mochac


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## DMcL1971 (8 Nov 2014)

Gerry Canning said:


> DmcL 1971.Seems strange you state JSA sign on once a year ? are you correct?



In my circumstance, yes. When you reach the end of the 9 months of entitlement for JSB you are assessed to see if you qualify for JSA payments. I did not qualify and am therefore not entitled to any further payments. However, I still have to sign on once a year in order to continue to receive credits.


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## Monbretia (8 Nov 2014)

The average is from year you started to work to year you will retire as per state rules.  So starting and stopping is a bad plan as is starting too young unless you remain in employment for the full time.  The contribution year is the calender year, used to be April to April so there is one year during the changeover that is counted differently.

If you take time out for further education there is no contribution unless you qualified for back to education allowance or similar, not sure if that counts as a credited contribution, your local Citizens Information office could advise.

Voluntary contributions are a flat rate of €500 per year, you must start these within a certain time of finishing paying contributions through work or signing for credits.


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## Mochac (9 Nov 2014)

Monbretia said:


> The average is from year you started to work to year you will retire as per state rules.  So starting and stopping is a bad plan as is starting too young unless you remain in employment for the full time.... .



So what's the difference between the 'Normal average rule' and the 'Alternative average rule' then ? As far as I can see they are identical if your first contributions start after 1979. Do they only differ if you started before 1979 ? 

Also, welfareDOTie/en/Pages/State-Pension-Contributory.aspx states under the 'Alternative average rule':
_Most employed or formerly employed people will be able to meet the alternative average._
How does this make sense? Suppose you take a job the Summer before starting college for a 4year degree at 18 years of age. If you dont work while in college then your average will be 44*52/48 = 47. So without missing a single week apart from when you are in full-time education you still wont meet the 'Alternative average rule'. How can this be reconciled with welfareDOTie saying that 'most' people will satisfy the alternative average ?


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## Black Sheep (9 Nov 2014)

The alternative average applies to people who have an unbroken record from 1979 to retirement. They will likely have paid some PRSI prior to 1979. 

If this is not the case they will then calculate the pension based on the full PRSI record which will extend back before 1979 and calculate pension by going back to the first day you paid PRSI

 They will always give you whichever is the best rate fianancially.


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## huskerdu (9 Nov 2014)

Gerry Canning said:


> DmcL 1971.Seems strange you state JSA sign on once a year ? are you correct?


 
I don't this is correct. 

I know of someone who did not qualify for JSA as the family income was means tested. She continued to sign on to preserve her PRSI contributions, She was told that she only had to sign on once a year, if she was still out of work.
Anyone I know who gets a JSA payment has to sign on regularly.


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## Mochac (9 Nov 2014)

Okay, I was planning on signing on tomorrow (1 week after being made redundant) but after looking into the specifics of the process I am now inclined not to. Basically the process looks like it is very invasive and could be more of a hindrance than a help. I work in a highly specialized niche and the process of applying for a new position is quite delicate and takes careful planning rather than just sending out CVs, so having someone breathing down my neck looking for proof that I have sent out CVs or worse asking me why I haven't sent CVs to my local McDonald's yet would be more hassle than it is worth and could actually be a distraction from preparing properly for a new job applicaiton.  On top of that my redundancy lump-sum means I will be disqualified from receiving any payment for ~2 months and I hope to have a new job by then. So overall it looks like the only thing I am loosing by not signing on is the continuity of my PRSI contributions which I am prepared to risk. 
So, the general responses in this thread are that there is nothing to be gained by delaying singing on but now I am asking the complementary question is there anything else (beyond PRSI contribution continuity) that I would be foregoing by delaying signing on ? 
If it turns out that I am wrong and that I can't find a job on my own I can sign on later, right?


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## Protocol (9 Nov 2014)

Mochac said:


> I work in a highly specialized niche and the process of applying for a new position is quite delicate and takes careful planning rather than just sending out CVs, so having someone breathing down my neck looking for proof that I have sent out CVs or worse asking me why I haven't sent CVs to my local McDonald's yet would be more hassle than it is worth and could actually be a distraction




They won't be breathing down your neck.

They will, sooner or later, look for proof of job search activity.

They won't force you to apply to McDonald's.


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## Monbretia (9 Nov 2014)

There will be no one checking up on you, that comes later when the JB runs out and you go on to JA if you were unfortunate to not get work by then.   You have contributed to this payment so there is less proactive chasing of people, it is more for those on means tested payments.

I never heard a word from them other than filling the initial form in the whole 9 months of claim, got one referral to Fas who never got back to me either.


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## DMcL1971 (10 Nov 2014)

They won't be breathing down your neck at all. In fact it is quite the opposite. When I went down to sign on, a few days after I lost my job, I was expecting an interview and a barrage of questions. All they asked was, when did I lose my job. I was then given an appointment to come back in 3 weeks. 

After three weeks I went in expecting the full interview and hassle but all they did was explain how to sign on and asked a couple of basic questions and offer me sympathy on being unemployed. My payments were backdated to the time I had initially shown up. 

During the 9 months that I was signing on I was required to attend one presentation that explained how they could be of assistance to me if I wanted their help. This consisted of a 10 minute powerpoint presentation. One other time  I was sent a form asking me to provide proof that I was attempting to find a job.

My advice is to just sign on, there is no down side to it and you are entitled to it. Why not accept the 188 a week that you are entitled to, just think how much you have paid in during your working life so far.


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