It is disgraceful that after introducing the new deferred pension scheme DSP refuse to give accurate detailed pension figures before a person applies for their pension. It is quite difficult to accurately work out your own pension. Especially so in the next 10 years while the averaging system is being phased out.
Once a person applies for their pension it cannot be cancelled if they realise that they are being awarded less than they estimated and would have been better off if they had deferred for a period.
In some cases a deferral period of a few weeks can be the difference between gaining an averaged pension into the next averaging band. The rules relating to how contributions are counted in the averaging method are complex and it is very likely that a lot of people will miscalculate their pension entitlement.
An error which for instance resulted in an average of 14.49 being applied instead of the 14.5 wrongly estimated by the person applying would resultin a loss of 69.90 euro per week in pension.
If this person had been preinformed of their error they could have deferred to 1st of January of the next calender year and probably regain most of the lost 69.90 euro.
At present I am trying to advise a person who will be 7 contributions short of the 14.5 average band at age 66. He is presently short of 23 contributions in order to reach the minimum level of 520 full rate paid contributions in order to qualify for a pension.
The dilemma is that he can postpone getting employment until the start of his pension claim year.
Normally any Prsi contributions gained in this year are not counted. But in the case where they are needed to reach the minimum level of 520 full rate paid contributions, they are counted.
So in effect he can increase his Prsi contributions immediately before he claims his pension.
I know for definite that the extra contributions needed to reach the 520 minimum level will be counted, but I was doubtfull if they would also be counted in the averaging calculation to bring him over average 14.5.
I have emailed this situation to DSP and sought guidance. While they tried to be helpful the answers are vague. They might be counted and there might be an extra year added to his averaging calculation.
Basically they can't give an accurate answer until he applies for his pension. It will then be calculated.
It's a bit like russian roulette if he applies on this basis.
Plan B would be to defer for a full calender year and definitely get into the 15 - 20 averaging band but then lose out on several months of pension payments and also lose out because of an extra years percentage deduction caused by the phasing out of the averaging method.
Irish workers should not be treated in this shoddy manner after working and paying their Prsi contributions.
A service to give accurate calculations before awarding the state contributory pension is overdue.
Once a person applies for their pension it cannot be cancelled if they realise that they are being awarded less than they estimated and would have been better off if they had deferred for a period.
In some cases a deferral period of a few weeks can be the difference between gaining an averaged pension into the next averaging band. The rules relating to how contributions are counted in the averaging method are complex and it is very likely that a lot of people will miscalculate their pension entitlement.
An error which for instance resulted in an average of 14.49 being applied instead of the 14.5 wrongly estimated by the person applying would resultin a loss of 69.90 euro per week in pension.
If this person had been preinformed of their error they could have deferred to 1st of January of the next calender year and probably regain most of the lost 69.90 euro.
At present I am trying to advise a person who will be 7 contributions short of the 14.5 average band at age 66. He is presently short of 23 contributions in order to reach the minimum level of 520 full rate paid contributions in order to qualify for a pension.
The dilemma is that he can postpone getting employment until the start of his pension claim year.
Normally any Prsi contributions gained in this year are not counted. But in the case where they are needed to reach the minimum level of 520 full rate paid contributions, they are counted.
So in effect he can increase his Prsi contributions immediately before he claims his pension.
I know for definite that the extra contributions needed to reach the 520 minimum level will be counted, but I was doubtfull if they would also be counted in the averaging calculation to bring him over average 14.5.
I have emailed this situation to DSP and sought guidance. While they tried to be helpful the answers are vague. They might be counted and there might be an extra year added to his averaging calculation.
Basically they can't give an accurate answer until he applies for his pension. It will then be calculated.
It's a bit like russian roulette if he applies on this basis.
Plan B would be to defer for a full calender year and definitely get into the 15 - 20 averaging band but then lose out on several months of pension payments and also lose out because of an extra years percentage deduction caused by the phasing out of the averaging method.
Irish workers should not be treated in this shoddy manner after working and paying their Prsi contributions.
A service to give accurate calculations before awarding the state contributory pension is overdue.
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