# Contributory State Pension



## Suze456 (30 Apr 2016)

Contributory State Pension is based on PRSI Class A contributions, right? So does it make any difference to your pension if you earn €38 or €3,800 a week? Both class A, do both get the same pension?


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## Protocol (1 May 2016)

Broadly, State pensions in Ireland are not linked to former earnings.

We are unique in Europe in this respect.

The amount of pension is linked to the amount of contributions.


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## NOAH (1 Jun 2016)

Did you mean to say the " Total number of contributions."


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## breakonthru123 (1 Jun 2016)

Yes, as I've figured out. Get someone to employ you for €38 a week over 10 years and you've got yourself a full state pension (lasting as long as you live from retirement..)

---

I wonder, could you employ yourself, through your own company, get paid €38 a week and get a state pension..

.. or would you be on a different PRSI class as you're a director / large shareholder?


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## Gordon Gekko (1 Jun 2016)

That person would fail the "employed for an average of 48/52 weeks test though, no?

A disincentive to take a summer job as a 16 year old if ever there was one.

Like most people, I had summer job. Then I was in school and college etc. This has a dilutitive effect on my PRSI record, meaning I may be shy of the 48/52 requirement.

Utterly ridiculous.


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## Palerider (1 Jun 2016)

If you are not working, say early retired, you can apply to become a voluntary contributor to the Dept Social Protection, the process is easy, you then pay €500 a year in arrears ( as it is now ) to the Dept Social Protection and that keeps your record at 100% contributions, the Dept. write to you each year following your acceptance so you will not miss it.


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## IsleOfMan (1 Jun 2016)

If a person is on a disability payment. Does this count as a "credit" similar to a weeks work/contribution?


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## Slim (1 Jun 2016)

Palerider said:


> If you are not working, say early retired, you can apply to become a voluntary contributor to the Dept Social Protection, the process is easy, you then pay €500 a year in arrears ( as it is now ) to the Dept Social Protection and that keeps your record at 100% contributions, the Dept. write to you each year following your acceptance so you will not miss it.


Hi Palerider. Can that work for a public servant who retires early and can it be pro rata for contributions from age 58 up to age 66?


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## Gordon Gekko (1 Jun 2016)

Slim said:


> Hi Palerider. Can that work for a public servant who retires early and can it be pro rata for contributions from age 58 up to age 66?



Presumably you can't do it retrospectively?

e.g. to cover the years between a summer job as a kid and entering the workforce?

Thanks.


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## Slim (1 Jun 2016)

Gordon Gekko said:


> Presumably you can't do it retrospectively?
> 
> e.g. to cover the years between a summer job as a kid and entering the workforce?
> 
> Thanks.


Understood, but can it be done for a public servant who retires sometime in the future?


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## Palerider (1 Jun 2016)

It does not cover lost years, if you qualify regardless of circumstances then you qualify, once you pay the requested amount annually you are deemed to have paid a full stamp, in theory by doing this you have no gaps, you must apply within a short time after leaving the workplace, not sure how long that is.


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## orka (1 Jun 2016)

Gordon Gekko said:


> That person would fail the "employed for an average of 48/52 weeks test though, no?
> A disincentive to take a summer job as a 16 year old if ever there was one.
> Like most people, I had summer job. Then I was in school and college etc. This has a dilutitive effect on my PRSI record, meaning I may be shy of the 48/52 requirement.


Yes. The current system is very unfair to those who started their work records early - either by not going to college and starting work at 17/18 or, as you say, by taking a summer job.  My understanding though is that the system is moving to a 'total contributions' approach where you would get a full pension if you have 30 years of contributions.  This seems fairer.



Palerider said:


> If you are not working, say early retired, you can apply to become a voluntary contributor to the Dept Social Protection, the process is easy, you then pay €500 a year in arrears ( as it is now ) to the Dept Social Protection and that keeps your record at 100% contributions, the Dept. write to you each year following your acceptance so you will not miss it.





Palerider said:


> It does not cover lost years, if you qualify regardless of circumstances then you qualify, once you pay the requested amount annually you are deemed to have paid a full stamp, in theory by doing this you have no gaps, you must apply within a short time after leaving the workplace, not sure how long that is.


Unfortunately, it's not as nice as just paying €500 a year (unless you were previousy a self-employed Class C contributor).  Contributions are based on your prior income and you may pay a higher rate than standard PRSI...  From welfare.ie: 


> "The rate of Voluntary Contributions payable is always determined by the last rate of PRSI contribution paid by a person. There are three different rates of voluntary contributions.
> *High Rate:*   This rate is payable by you if the last PRSI contribution paid by you is at Class A, E or H. The amount payable in each contribution year is a percentage rate of your reckonable income in the preceding contribution year. This percentage rate is currently 6.6%. The minimum annual payment is €500.00.


So if your income in your final year working was 50,000, you would need to pay 3,300 annually in voluntary contributions.


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## Palerider (3 Jun 2016)

Thanks for clarifying, I was class S before becoming a voluntary contributor,


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## RETIRED2017 (16 Feb 2018)

I suspect loopholes like above is the reason there will be no fund to pay the forty something when they reach retirement ,

Some see one sixth of there payroll go each week to fund there state pension others only have to pay 500E per year for the same pension ?

People need to open your eyes unless you are in the above group who are piggy backing of the people who pay PRSIA1 all of there life trough payroll,


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## dub_nerd (16 Feb 2018)

RETIRED2017 said:


> Some see one sixth of there payroll go each week to fund there state pension others only have to pay 500E per year for the same pension ?



If you want to complain about equity in payouts then why aren't you complaining that not everyone's one sixth of payroll is the same either. So, having been well inside the top 10% of earners (who paid over 60% of all the income tax), I should be complaining that well over 90% of even the full contributors will be "piggybacking" on _me_. Do you really want to get into that argument?


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## RETIRED2017 (16 Feb 2018)

dub_nerd said:


> If you want to plain about equity in payouts then why aren't you complaining that not everyone's one sixth of payroll is the same either. So, having been well inside the top 10% of earners (who paid over 60% of all the income tax), I should be complaining that well over 90% of even the full contributors will be "piggybacking" on _me_. Do you really want to get into that argument?


I Know well what you are on about Up until a few year ago when my wages reached a certain level PRSI stopped it was capped because that was what it would have taken to provide a state contributory pension the only thing that has changed is the piggy backers are now reaching retirement age now and it is very easy to spot them ,

some are very knowledgeable people when it comes to money /stocks shares private pensions BUT when it comes to the same people understanding that some people see one sixth of there payroll going into the PRSI Fund while other put very little and get the same pension and don't understand

Judging the way the understand the present prsi system you would not trust them to be able to put there pants on the correct way around when they get up in the morning,

Anyone with  earned or unearned income and people on high wages trough payroll are paying the price for all the people who have being piggy backing the PRSI system  for the last forty years and no sign of it to stop,

I retired seeing my PRSI capped for Most of my working life I am happy enough Over to you now to get the same so stop the winging,

It is the forty something that is paying the price now the only reason I posted on this forum was because the forty something who is well set up was trying to set the Dogs After The People Who Paid For there Pension so no one would notice the people who have not,

At all stages I pointed out I was speaking on behalf of the people who seen one sixth of there payroll go into the PRSI Fund  ,

I think of the people still working men and woman who get up in the morning drive long distances  having to get there children ready for school/creche first and the  prsi system the are paying into being raided with the help of FF/FG

And the piggy backers trying to turn them against there own mothers and fathers who are retired and payed there way all of there working life,


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## RETIRED2017 (17 Feb 2018)

dub_nerd said:


> If you want to complain about equity in payouts then why aren't you complaining that not everyone's one sixth of payroll is the same either. So, having been well inside the top 10% of earners (who paid over 60% of all the income tax), I should be complaining that well over 90% of even the full contributors will be "piggybacking" on _me_. Do you really want to get into that argument?


It is the top 10% who will be paying for the piggybackers from now on trough earned and unearned taxes
The piggy backers for the last forty to fifty years have reached retirement  or will shortly

No point backing people who did not pay there fair share of PRSI and giving out about the top 10 % paying more than there fair share  there is a connection you know,

Think about it this  way each piggy backer will live about 25 years you said you are in your forties so you will have to pay tax to keep them until you reach pension age not to mention  all the extra piggy backers who will be retiring and pulling from the top 10% each year until then,


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## RETIRED2017 (17 Feb 2018)

If you are not working, say early retired, you can apply to become a voluntary 
contributor to the Dept Social Protection, the process is easy,

Post no six above

 you then pay €500 a year in arrears ( as it is now ) to the Dept Social Protection and that keeps your record at 100% contributions, the Dept. write to you each year following your acceptance so you will not miss it.[/QUOTE]

so now you know Why the top 10% have to pay more than they should including reminding the piggybackers  not to forget to rip the top 10% off,


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## Palerider (17 Feb 2018)

What a load of nonsense, how dare you suggest I am a piggybacker who has not paid his share, I have 35 years paid Class A contributions and actually have no need to continue as a voluntary contributor at all, also if you read the posts you will see that the €500 is a minimum payment.


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## noproblem (17 Feb 2018)

Palerider said:


> What a load of nonsense, how dare you suggest I am a piggybacker who has not paid his share, I have 35 years paid Class A contributions and actually have no need to continue as a voluntary contributor at all, also if you read the posts you will see that the €500 is a minimum payment.



Have to agree though, for €500 per year you get a bloody great return. That's on the understanding you live a few years to enjoy it. Someone's paying for it even if I pay a bit myself.


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## RETIRED2017 (17 Feb 2018)

noproblem said:


> Have to agree though, for €500 per year you get a bloody great return. That's on the understanding you live a few years to enjoy it. Someone's paying for it even if I pay a bit myself.


If they are to retire this year at 66, 2018
I agree if you are 45 at present there is a good chance people retiring in 2018  will   still be alive by the time the 45 year old retires

Someone is going to have to pay tax to fund it we all know who pays the most tax in this Country,

The good news is they love paying tax to fund the above,


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## gar32 (17 Feb 2018)

You are all missing the point. When someone gets to 67 years or older they should have enough to keep the wolves from the door. Life is not fair and some people will work or pay more then others. If there is anyone to blame for a bad system is the FF & FG crowed trying to get the grey vote with and extra €5 a week just before election time.


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## RETIRED2017 (18 Feb 2018)

gar32 said:


> You are all missing the point. When someone gets to 67 years or older they should have enough to keep the wolves from the door. Life is not fair and some people will work or pay more then others. If there is anyone to blame for a bad system is the FF & FG crowed trying to get the grey vote with and extra €5 a week just before election time.



I agree and thankfully we have the means tested pension which will take care of what you have outlined above,

Long term the state needs to have the means and be in a position to pay the people who paid in all of there working  life along with the means tested pension for anyone in the above position,

We need to start ring fencing a % of the PRSI fund to make sure there is money to pay the 20/30/40 year old pension when the time comes to payout the first stage is everyone with an income should pay the same % of payroll in for There pension no matter where they work or what they do,

And the state should also put in the average % of payroll collected each year for each person they allow into the fund in other words if there are one million people paying into the fund and the state allow 100000 into the fund the state should put in 10% of total Payroll PRSI  collected to Fund the 100000 extra people who will be allowed to claim state contribution pension when the time comes,

FF/FG  are the same party so we never had a change of Government in this Country I voted  FF for most of my life If FG get the state contribution pension sorted I will never vote for FF again. I would have voter FF first followed by voting FG next if I was not happy with FF I would switch to voting for FG first to be honest I got FF with a different name, the are the same party as FF up until now.

since  around 2012 the state are charging prsi on unearned Income along with getting rid of the wage cap ,

If the state want to take 500 euro per year and allow a person into the system the need to top up the fund to what the average person payroll  paid in to the prsi Find in that year,

If the state want to allow people into the fund without paying anything they need to top up the fund to what the average person  payroll paid into the prsi fund in that year,

I am open to changing my view once there will be a fund to pay the 20/30 and forty something who see one sixth of there payroll go into the PRSI Fund,

By the way I am retired if FF/FG are allowed  there will be no money to pay the state contributary or mean tested pensions it will not be in my life time but it will be in the 20/30 and 40 something life time,

That is the only point we are missing,

PS
The 5 euro  the Government Gave in the last few Budgets had more to do with keeping the lid on the Lobsided PRSI system we have it was to keep the people who see one sixth of there payroll go into the PRSI Fund feel good looking after the goose who is laying the golden egg comes to mind the younger goose is going to get its head chopped off once she cannot lay enough eggs for the piggy backers,


While allowing  much stronger lobby groups get the same pension without having to pay the same amount into the Fund,


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## Grueler (28 Feb 2018)

According to todays announcement you will need 40 yrs contributions to get the full pension from 2020.


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## dub_nerd (28 Feb 2018)

RETIRED2017 said:


> We need to start ring fencing a % of the PRSI fund to make sure there is money to pay the 20/30/40 year old pension when the time comes to payout



This is delusional. As I have said before there _is_ no "PRSI fund" except in name only. Ring fencing would imply that there is money building up in the fund each year, and that current pensions are being paid out of decades old investments. That simply isn't the case. There is no money in the pot for _anyone_ other than what goes through the current account annually (and a very modest recent surplus).

EDIT: I see today's new Pensions Report says it too -- the State Pension scheme _"is premised on the principle of social rather than personal insurance and operates on a Pay as You Go (PAYG) basis meaning that today’s pensions are not funded by past contributions made by today’s pensioners but are instead funded by the taxes and social insurance contributions of today’s workers. "_



RETIRED2017 said:


> the first stage is everyone with an income should pay the same % of payroll in for There pension no matter where they work or what they do,



And you still won't explain why you think everyone should pay the same percent. If you're going to give out about the people who didn't pay enough contributions to justify their pensions then I'm going to complain about the people who paid their ten percent but still only paid a tenth of what I paid. How about ring fencing _my_ contributions so I get ten times more than the average person? (Not that I think that should happen, but seeing as you clearly don't think people should get paid _pro rata_ I don't see how you can complain about people with minimal contributions).


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## Palerider (28 Feb 2018)

Yes it seems 40 years contributions are required shortly. The debate changes from having 10 years contributions to get you a full pension to  recognising those with 40 years required to get a full pension,


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## Bladerunner (28 Feb 2018)

Palerider said:


> Yes it seems 40 years contributions are required shortly. The debate changes from having 10 years contributions to get you a full pension to  recognising those with 40 years required to get a full pension,


 A person does not get a 'full Pension" with 10 years contribution. You get a percentage of a full pension which works out at 83 euro per week approx.


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## delfio (1 Mar 2018)

Bladerunner said:


> A person does not get a 'full Pension" with 10 years contribution. You get a percentage of a full pension which works out at 83 euro per week approx.



That's incorrect. Under the present system some people can.


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## Protocol (1 Mar 2018)

Yes, it is currently possible to get a full CSP after ten years work, although it would be unusual.


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## RMGC11 (1 Mar 2018)

What do people think of the potential changes in the relief rate?
https://www.independent.ie/business...uld-affect-thousands-of-workers-36656462.html



			
				indo said:
			
		

> The Government is considering standardising tax relief on pension contributions at 30pc, in a move that would hit thousands of workers.



Should people on the higher tax rate pile on the AVCs to their max relief limit until that comes into play?


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## RETIRED2017 (1 Mar 2018)

RMGC11 said:


> What do people think of the potential changes in the relief rate?
> https://www.independent.ie/business...uld-affect-thousands-of-workers-36656462.html
> 
> 
> ...


Unless you are on a very high salary if you max out your age limit tax break relief will work out around  30% in most cases today,


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## delfio (1 Mar 2018)

I think it's a great idea people who are self employed can join the forthcoming auto enrolment pension scheme .


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## RMGC11 (2 Mar 2018)

RETIRED2017 said:


> Unless you are on a very high salary if you max out your age limit tax break relief will work out around  30% in most cases today,



Ohh, I never actually realized that, I was always assuming the same flat relief rate. So for most people, they should use something like the following formula for the higher rate of relief for AVCs:
(CurrentSalary - HigherMarginalTaxRate=34,550 <e.g.: 2018, single>) * AgeRelatedReliefRate <e.g.: 20%, for ages 30- 39> - RegularEmployeePensionContribution.

For example, using the following fictional numbers: a single 35 year old on a 100k salary that contributes 500 a month (6k a year) in his regular pension contributions through his employer (assuming here some matching is done by the employer - though the employer contribution does not count to the relief limit AFAIK) can get 40% relief on AVCs on the following amount:

(100000 - 34550) * 0.2 - 6000 = *7090*. That is thus the maximum amount he can put in AVCs, after which the relief rate drops to 20%.

Is the math above correct? (If so, I probably need to revise my AVC rate down a bit..)


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## mtk (2 Mar 2018)

RMGC11 said:


> (100000 - 34550) * 0.2 - 6000 = *7090*. That is thus the maximum amount he can put in AVCs, after which the relief rate drops to 20%.
> 
> Is the math above correct? (If so, I probably need to revise my AVC rate down a bit..)



No max he can contribute = .2*100,000-6,000=14,000
and 14,000 is far less than what he pays 40% on ( which on your numbers is 100,000-34550=65k approximately.)
so all the 14000 AVC and 6000 normal pension contribution gets 40% tax *relief.*


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## scottie (25 Apr 2018)

I am on invalidity pension I turn 66 on August 2018,also I get a allowance for my wife,will we both get a contributory pension automatically when I retire ,my wife turns 66 on May 2018 she does not have enough contribution to apply for her own pension.


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## gipimann (25 Apr 2018)

scottie said:


> I am on invalidity pension I turn 66 on August 2018,also I get a allowance for my wife,will we both get a contributory pension automatically when I retire ,my wife turns 66 on May 2018 she does not have enough contribution to apply for her own pension.



If your wife does not have enough contributions for a contributory pension, she won't get one automatically when you retire.
The options are for her to apply for a non-contributory pension, which is means-tested, or to stay as a qualified adult on your pension - whichever is more advantageous.
If she stays as a qualified adult on your pension, it will be paid directly to her (unlike Invalidity Pension which is paid to you on behalf of both of you).


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## scottie (25 Apr 2018)

Will my wife have apply for her state pension, even if she stays as a qualified adult on my pension.


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## Black Sheep (25 Apr 2018)

No


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