Contributory Pension Entitlement for Wife.

[Jack Frost]

Greetings,

I am hoping someone can clarify if my wife will be entitled to a full contributory pension. She is 65 years old and is from Germany, but has lived and worked in Ireland since 2008 when she was 51. The company she worked for closed down 2 years ago and she didn't seek further employment or claim any benefits. So she has 12 years class A contributions, (ie 624). Before she moved here, she doesn't really have to many SW contributions in Germany, other than about 3 years of SW contributions back in the late 70's early 80's.

My question is, does the clock start ticking when calculating her overall contributions when she first started working in Ireland in 2008, thereby I think entitling her to the max pension, or will she need to go back and find the few years contributions she made in Germany and receive a pro-rata amount.

Thanks in advance for any guidance you can provide.

 

[Allpartied]

Looks like she's in luck. She will, most likely, be measured under the averaging model.
If she has, at least, 10 years of full contributions, since she started working here. She will have 12/14 years and her pension will be calculated on tht basis.
So, the 624 contributions will be dived by 14, which gives 44.5 as her average contribution. the averaging system gives a full pension to anyone with 48 average contributions. She is just below that so will get a slightly lower amount. That entitles her to a pension of 260.10 per week.
She could also make voluntary contributions for the years she missed and get the full pension of 265.

Voluntary social insurance contributions

Voluntary social insurance contributions can help you qualify for a social insurance payment in the future. Find out more about making voluntary contributions.

www.citizensinformation.ie

She's lucky, because the system will, most likely, change next year and the total contributions approach will be used.

 

[Conan]

If her average contribution pa from 2008 to 2023 is say 44.5 (as above) then she will qualify for a 98% Pension based on the Total & Average System. So if she is 66 in 2023, that will be how her Pension is calculated
Whilst the calculation model is due to change in 2024, it will only gradually move to the Total Contribution Approach over a period of years.

 

[Kev1964]

She's lucky, because the system will, most likely, change next year and the total contributions approach will be used.

The following is from Report of the Commission on Pensions from October 2021. In subsequent press comment I recall that the transition arrangements (proposed to last 10 years) may kick off in 2024. Since then I've not heard a dickey bird either about "Transitional Arrangements" or a potential effective date. Of course I may have missed something but when on the phone last year to someone in the dept responsible for pensions, I was told they've not heard anything either and something like this needs a long lead in time and legislation. Possibly the Govt is kicking a change from the current arrangement of choosing between TCA and Average down the road, again.

8.6. Transitional Arrangements The Commission is conscious that some people would qualify for a better rate under the Yearly Average approach than under this Total Contributions Approach design – specifically, those with shorter contribution histories, and those with more than 10 years of credited contributions. In order to protect upcoming pensioners from a sudden and significant change in calculation method, the Commission recommends that for those who are better off having their pension entitlement calculated under the Yearly Average approach, a phased transition to the Total Contributions Approach should apply gradually over a 10 year period. • The Commission recommends that for the transition period, where a person does not qualify for the maximum weekly rate of payment under the Total Contributions Approach and would have been better off under the Yearly Average Approach, a proportion of the rate will be calculated under the Yearly Average Approach and the remainder under the Total Contributions Approach.21 • These proportions will gradually change over time – pensioners who would be better off under the Yearly Average approach who qualify for the State Pension Contributory in the first year of the transition will receive 90 per cent of the rate calculated under Yearly Average approach, and 10 per cent under the Total Contributions Approach for the duration of their pension payment. Pensioners qualifying in the second year of the transition, will have receive 80 per cent of the rate calculated under Yearly Average, and 20 per cent under the Total Contributions Approach for the duration of their pension payment, and so on, with the full transition completing over 10 years. This is similar to the approach taken in Norway when they introduced a change in the calculation method.

 

[Allpartied]

The following is from Report of the Commission on Pensions from October 2021. In subsequent press comment I recall that the transition arrangements (proposed to last 10 years) may kick off in 2024. Since then I've not heard a dickey bird either about "Transitional Arrangements" or a potential effective date. Of course I may have missed something but when on the phone last year to someone in the dept responsible for pensions, I was told they've not heard anything either and something like this needs a long lead in time and legislation. Possibly the Govt is kicking a change from the current arrangement of choosing between TCA and Average down the road, again.

8.6. Transitional Arrangements The Commission is conscious that some people would qualify for a better rate under the Yearly Average approach than under this Total Contributions Approach design – specifically, those with shorter contribution histories, and those with more than 10 years of credited contributions. In order to protect upcoming pensioners from a sudden and significant change in calculation method, the Commission recommends that for those who are better off having their pension entitlement calculated under the Yearly Average approach, a phased transition to the Total Contributions Approach should apply gradually over a 10 year period. • The Commission recommends that for the transition period, where a person does not qualify for the maximum weekly rate of payment under the Total Contributions Approach and would have been better off under the Yearly Average Approach, a proportion of the rate will be calculated under the Yearly Average Approach and the remainder under the Total Contributions Approach.21 • These proportions will gradually change over time – pensioners who would be better off under the Yearly Average approach who qualify for the State Pension Contributory in the first year of the transition will receive 90 per cent of the rate calculated under Yearly Average approach, and 10 per cent under the Total Contributions Approach for the duration of their pension payment. Pensioners qualifying in the second year of the transition, will have receive 80 per cent of the rate calculated under Yearly Average, and 20 per cent under the Total Contributions Approach for the duration of their pension payment, and so on, with the full transition completing over 10 years. This is similar to the approach taken in Norway when they introduced a change in the calculation method.

This is a possible transition programme,

State Pensions: 1 Dec 2022: Written answers (KildareStreet.com)

A site about the Houses of the Oireachtas that you can actually follow.

www.kildarestreet.com

However, nothing has been put into legislation yet and it will be a controversial change for many.
Although it seems fairer, there is no-one who will be better off, under the new arrangement. Some people will be no worse off, but large numbers of people will be considerably worse off. I think its unlikely the changes will go through without amendment of some kind. Perhaps, reducing the TCA to 35 years or less, or maintaining the average approach for people who came to Ireland later in life and don't have any other, comparable pension from other countries.
We will see, hopefully, quite soon.

 

[Jack Frost]

Thank you all for your comments....much appreciated.....we will complete the application, and send it in...thanks again..

 

[roker]

Can you clarify how that would effect myself on an existing 98% pension with 30yrs contributions

 

[ClubMan]

Can you clarify how that would effect myself on an existing 98% pension with 30yrs contributions

How what would Affect you?
If you're already drawing you pension then nothing will affect that.

 

[NoRegretsCoyote]

Can you clarify how that would effect myself on an existing 98% pension with 30yrs contributions

It wouldn't at all. A contributory pension is a personal entitlement and your spouse's income can't impact your entitlement.

I am hoping someone can clarify if my wife will be entitled to a full contributory pension. She is 65 years old and is from Germany, but has lived and worked in Ireland since 2008 when she was 51. The company she worked for closed down 2 years ago and she didn't seek further employment or claim any benefits. So she has 12 years class A contributions, (ie 624). Before she moved here, she doesn't really have to many SW contributions in Germany, other than about 3 years of SW contributions back in the late 70's early 80's.

I know nothing about German social security law butt might be worth looking at her right to make voluntary contributions in Germany. As per EU rules she would probably not be able to make voluntary contributions in Germany for the years she was employed in Ireland, but it's worth looking at for the last two years to see if it would make a difference.

PS: there is scope to aggregate contributions across member states but in her case this wouldn't make it better off.

 

[Forumuser]

Greetings,

I am hoping someone can clarify if my wife will be entitled to a full contributory pension. She is 65 years old and is from Germany, but has lived and worked in Ireland since 2008 when she was 51. The company she worked for closed down 2 years ago and she didn't seek further employment or claim any benefits. So she has 12 years class A contributions, (ie 624). Before she moved here, she doesn't really have to many SW contributions in Germany, other than about 3 years of SW contributions back in the late 70's early 80's.

My question is, does the clock start ticking when calculating her overall contributions when she first started working in Ireland in 2008, thereby I think entitling her to the max pension, or will she need to go back and find the few years contributions she made in Germany and receive a pro-rata amount.

Thanks in advance for any guidance you can provide.

If your wife is getting 66 years this year, she will get about Euro 260.10, because she has an average of 41.6 ( to be rounded up to 42). If she is getting 66 next year, she will drop down to an average of 39- which brings her into a different pay band: Euro 238.50
She should apply for the average system, because the TCA will bring her pension down to only Euro 70.83- unless she has a few years of child rearing in Ireland.
At the moment she would not qualify for a German pension- she has not raked up the 5 year minimum contributions. She could go for a pro rata pension and combine her Irish and German contributions and credits. I would not advice it- her entry into the workfroce will be different then- it will be the late 1970s instead of 2008. That means that there is a different average calculation- her combined contributions would be divided by at least 43- and she would drop down to the second lowest Irish band.
She still might be able to pay in voluntary in Germany and reach the 5 years she needs to qualify for a German only pension. But there is a serious sting here: Her German pension will be liable for German tax- no joke. She will be required to make a yearly tax declaration to the German tax office- including all her Irish income.She should figure out first how much she would be entitled to if she pays in the missing contribution months. It might not be worth it- the payment might be very small. In that case she can ask for a payout of all her German contributions she ever paid in. Her German state pension account will be closed after that.