# Contributory State Pension - Average Rule



## pudds (19 Jan 2011)

This is my category.



> If you reach pension age on or after April 6 *2012*, you will  need to have 520 paid contributions (*10 years paid contributions*). In  this case, not more than 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 10 contributions, you may  meet the requirement if you have a total of 520 contributions, but only  156 need to be compulsory paid contributions.



Have the above 10yrs paid contributions in one decade alone also
I've worked since 1963 p.a.y.e worker and have a period of 5yrs with no credits at all but other wise have 42yrs of paid or credited contributions.

Grand so far but the average rule I find is very confusing.



> *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*.



In that case if I need 48 p.a. for every year since I started work why bother having the 10yr rule above.   In this case my 5yr absence from prsi will mean I won't qualify for the full pension.


I know I'm missing something here,  or is the 48 average related to the 10yr rule above....It's doin me head in


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## diem (19 Jan 2011)

Pudds, I'm sure you will get far more informative replies but I have found the following example of help to me.


Example 1					
A person started paying social insurance for the first time on 7					
August 1961. They reach age 66 on 12 June 2006. The last tax year					
before they reach age 66 is the 2005 year.					
1. Counting from the 1961 tax year up to and including the 2005					
tax year gives a total of 45 years.					
2. They have a total of 1,260 reckonable contributions					
3. Dividing 1,260 contributions by 45 years gives a yearly average					
of 28 contributions.					
Based on this record they will qualify for 98% of the standard rate					
OACP.


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## twofor1 (19 Jan 2011)

pudds said:


> Grand so far but the average rule I find is very confusing.


 
My understanding is the average rule applies from when you enter the system.

I’m in the same boat, since first entering the system, for various reasons there are gaps in contributions, if I keep working till 65, my average will probably be about 44, so only a 98% state pension. I would not be overly concerned about the 2%.

This average would have to drop to 19 (which can’t happen at my current age) for the 75% pension to apply.

http://www.welfare.ie/EN/Publications/sw122/Pages/7Whatarethevariousamountsofstandardratepension.aspx


My concern is with the state of our countries finances, drastic cuts are going to have to be made.

By the time I reach 65, there will be any money left in the pot for me ?


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## pudds (20 Jan 2011)

thanks lads and twofor1 for that link....excellent information there....runs off to do sums...but its lookin good for at least a 98% pension in my case and assuming as all ready said above, if there is any money left in the pot in 2015.


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## Black Sheep (21 Jan 2011)

Sorry to be the bearer of the bad news for both of you, but as you seem to be retiring in 2015 at age 65 the Transition Pension will be abolished in 2013 so you will have to continue working till 2016 (Contributory Pension is paid at age *66*) or consider alternative income to tied you over.
Have I mis-read your post


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## hopalong (21 Jan 2011)

do you mean that if you are 65 in 2013 ,you may not retire till your 66.


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## Black Sheep (21 Jan 2011)

If you are 65 in 2013 you *will* qualify for Transition Pension (Formerly Retirement Pension) if you have the required PRSI and are retired.

If you are 65 on, or after January 2014 you cannot qualify for Transition Pension as Transition Pension will be abolished. You will have to wait till age 66 and apply for State Contributory Pension (Formerly Old Age Pension)


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## Black Sheep (21 Jan 2011)

To Pudds and Two for One
As both of seem to have gaps in PRSI records, have you ever worked in the UK or abroad


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## twofor1 (21 Jan 2011)

Black Sheep said:


> Have I mis-read your post



   I’m not as old as pudds, 

   Looks like I will have to wait beyond age 66 to get my state pension, I forgot about this;

  [broken link removed]  

  My entry date to the system was when I was 15, summer holiday work, AFAIK my average is calculated from this date even though I would only have had a few contributions annually for a few years before I left school and entered full time employment.

  Was self employed for a few years and travelled a bit, which further reduces the average.

   Don’t have any contributions anywhere else.


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## pudds (21 Jan 2011)

Black Sheep said:


> Sorry to be the *bearer of the bad news for both of you,* but as you seem to be retiring in 2015 at age 65 the Transition Pension will be abolished in 2013 so you will have to continue working till 2016 (Contributory Pension is paid at age *66*) or consider alternative income to tied you over.
> Have I mis-read your post



jebus will you *stop* *that* are ya trying to finish us off early  for a moment there I though you were going to say that we miscalculated the average rule all wrong and would get next to nowt

Got this reply back from SW.



> The State Transition Pension will be abolished in 2014 so I would advise  you to keep your insurance record up-to-date in that year if you are  not in insurable employment ie .. sign for PRSI credits.
> 
> As you know the Government recently announced plans for wide-scale  reform of the Irish State Pension system.  As the majority of these  changes will affect those who will reach pension age during or after  2014, it is recommended that you familiarise yourself with these  changes. You can access the 'National Pensions Framework' online via  this Department's Website


It doesn't say exactly when in 2014 the STP is being abolished if it was after 25 March I could claim the STP but I'm not holding my breath.

I will be 65 on that date hopefully


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## Black Sheep (22 Jan 2011)

From the "National Framework for Pension" Document page 24 states that from January 1st 2014 pension age will be 66 and STP will be abolished on 31st December 2013.

Therefore it looks like if you must retire (at age 65 in March 2014 as per your employment contract) then your option seems to be JB until you reach 66.

BTW I'm not enjoying passing on this information. I'd much prefer telling you there was a pot of gold out there to go with the gold watch


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## pudds (22 Jan 2011)

Just wondering if the  "National Framework for Pension" document is actually law now or is it just proposed legistration to be implemented later.


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## Black Sheep (22 Jan 2011)

As far as I know that portion of it has been implemented. Just can't find the relevant link at the moment


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## roker (23 Jan 2011)

I had a 4 year gap when I was working abroad which gave me an average of 43 contributions, 98% Irish pension. I also had 20 years UK contributions and gave me 50% UK pension which more than made up the difference.


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## hopalong (13 Apr 2011)

diem said:


> Pudds, I'm sure you will get far more informative replies but I have found the following example of help to me.
> 
> 
> Example 1
> ...


this is an easy to understand example,thanks,  but to complicate it a little for people with mixed insurance i am looking at s/welfare site ; If you reach pension age on or after 6 April 6 2012, you will need to have a total of at least 520 full and mixed contributions paid and at least 260 of these must be full contributions.
  What happens to people with mixed insurance is that all contributions at the full and modified rates are added together. The average is then measured in the normal way. If you have an average of at least 10 then you may qualify. Then the number of full contributions is divided by the total number of contributions to find out what proportion are full rate; you then get that proportion of the pension.  i have mixed stamps, 1404 are public class d stamps and 505 are class a stamps. the number of years working is 49.  adding all stamps is 1909,and dividing by 49 is 38.  looking at this i think i have an average of 10 to qualify,but i dont know what portion this would give me.  and to get a full rate state contributory pension how many more years a class stamps would i need.


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## Black Sheep (14 Apr 2011)

As your yearly average is 38 (if all were full rate cons.) this would give you a pension of 225.80. 

*Step 2*:-  225.80 x 505 divided by 1909 = E59.73


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## hopalong (14 Apr 2011)

no,and yes the average i worked out by adding all my stamps A and D,and dividing by the number of years worked(49).your say the pension is 225.80euro,and what does step 2 refer to.thanks.


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## Black Sheep (15 Apr 2011)

This is the second part of the calculation where there are mixed rate contributions involved. As the class D contributions do not have the same value as the class A, the second part (step 2) of the calculation is necessary.

Have you got a full record from SW?


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## hopalong (15 Apr 2011)

yes just checked,ive 423 A class, and 1443 D class. here is my calculation.   423+1443=1866     divided by 50  (years working)  =37.32        step2     225.80x423=95513.4 divided 1866=51.18euros.  have i done the calculation correctly.  as i have 8years class A stamps on my record,if i can work a further 2 years on class A this should give me a full state contributory pension.


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## Black Sheep (16 Apr 2011)

If you work for a further 2 years you should then have 527 contributions which is just above the required 520, and gives you a yearly averaoe of 10.5. SW *may* look at the class A alone and therefore allow a half-rate pension.
I think you should talk to Pensions Office about this and get their written clarification.


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## hopalong (16 Apr 2011)

thanks for your help.


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