Deferring your State Pension (Contributory) - break even point is age 88

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TheJackal

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Age when you start to claimMaximum rateper yeardiff v 66
Age 66€277.30€14,469.51€0.00
Age 67€290.30€15,147.85€678.34
Age 68€304.80€15,904.46€1,434.95
Age 69€320.30€16,713.25€2,243.74
Age 70€337.20€17,595.10€3,125.58
Age6667686970
66€14,469.51€0.00€0.00€0.00€0.00
67€28,939.03€15,147.85€0.00€0.00€0.00
68€43,408.54€30,295.71€15,904.46€0.00€0.00
69€57,878.06€45,443.56€31,808.93€16,713.25€0.00
70€72,347.57€60,591.42€47,713.39€33,426.51€17,595.10
71€86,817.08€75,739.27€63,617.86€50,139.76€35,190.19
72€101,286.60€90,887.12€79,522.32€66,853.02€52,785.29
73€115,756.11€106,034.98€95,426.78€83,566.27€70,380.38
74€130,225.63€121,182.83€111,331.25€100,279.52€87,975.48
75€144,695.14€136,330.69€127,235.71€116,992.78€105,570.58
76€159,164.65€151,478.54€143,140.18€133,706.03€123,165.67
77€173,634.17€166,626.39€159,044.64€150,419.29€140,760.77
78€188,103.68€181,774.25€174,949.10€167,132.54€158,355.86
79€202,573.20€196,922.10€190,853.57€183,845.79€175,950.96
80€217,042.71€212,069.96€206,758.03€200,559.05€193,546.06
81€231,512.22€227,217.81€222,662.50€217,272.30€211,141.15
82€245,981.74€242,365.66€238,566.96€233,985.56€228,736.25
83€260,451.25€257,513.52€254,471.42€250,698.81€246,331.34
84€274,920.77€272,661.37€270,375.89€267,412.06€263,926.44
85€289,390.28€287,809.23€286,280.35€284,125.32€281,521.54
86€303,859.79€302,957.08€302,184.82€300,838.57€299,116.63
87€318,329.31€318,104.93€318,089.28€317,551.83€316,711.73
88€332,798.82€333,252.79€333,993.74€334,265.08€334,306.82

In all cases, deferring your State Pension (Contributory) from age 66 to either 67, 68, 69 or 70 will take until age 88 to break even

Deferring your State Pension (Contributory)

You can start to claim your State Pension (Contributory) at any age between 66 and 70. This page explains who can defer (delay) their State Pension (Contributory), rates for different age groups, and how to apply.
www.citizensinformation.ie
 
If you factor in the time value of money the breakeven age is in the 90s.

It only makes sense for someone who doesn’t have 2080 PRSI contributions by 66 and needs a few more years of employment to get there. Or perhaps some big drop in other income that would see marginal rate fall from 40% to 20%.

Even still I suspect the numbers who will take this up will be small, and most of those will have been ill-advised.
 
Just an alternative way of considering this instead of break-even period, but if I wanted to forego €277 a week for four years, I could put it on deposit at say 3% to build up a pot of about €61,500, then buy a €3,125 annuity at 5.5% (taking an annuity rate from a recent post here) for €56,818.

In that light, it’s not the worst deal going. But you could do significantly better by investing rather depositing if your plans could tolerate that risk.
 
conor_mc said:
In that light, it’s not the worst deal going.
Click to expand...

If I do the sums that’s 100/5.5 or 18.7 years of expected annuity at 70. You deflate that by the 12.5% investment return over the three years so 16.9 years. So putting the money in deposit then purchasing an annuity would see someone break even at 87 rather than 88.
 
Just an alternative way of considering this instead of break-even period, but if I wanted to forego €277 a week for four years, I could put it on deposit at say 3% to build up a pot of about €61,500, then buy a €3,125 annuity at 5.5% (taking an annuity rate from a recent post here) for €56,818.

In that light, it’s not the worst deal going. But you could do significantly better by investing rather depositing if your plans could tolerate that risk.

If you did build up €61,500 at age 70 though and invested at just a 5% average return (ignoring volatility/sequence of return risk for the purposes of this hypothetical exercise), you could withdraw €260/month or €3125 a year, and still have €59.5k of capital left after 25 years.

(Edit: Oops, double post!)
 
2025 State Pension (Contributory) Rates (all up €12 weekly)
Break Even age now at 89

Age when you start to claimMaximum rateper yeardiff v 66
Age 66€289.30€15,095.67€0.00
Age 67€302.30€15,774.01€678.34
Age 68€316.80€16,530.62€1,434.95
Age 69€332.30€17,339.41€2,243.74
Age 70€349.20€18,221.26€3,125.58
Age6667686970
66€15,095.67€0.00€0.00€0.00€0.00
67€30,191.35€15,774.01€0.00€0.00€0.00
68€45,287.02€31,548.03€16,530.62€0.00€0.00
69€60,382.70€47,322.04€33,061.25€17,339.41€0.00
70€75,478.37€63,096.06€49,591.87€34,678.83€18,221.26
71€90,574.04€78,870.07€66,122.50€52,018.24€36,442.51
72€105,669.72€94,644.08€82,653.12€69,357.66€54,663.77
73€120,765.39€110,418.10€99,183.74€86,697.07€72,885.02
74€135,861.07€126,192.11€115,714.37€104,036.48€91,106.28
75€150,956.74€141,966.13€132,244.99€121,375.90€109,327.54
76€166,052.41€157,740.14€148,775.62€138,715.31€127,548.79
77€181,148.09€173,514.15€165,306.24€156,054.73€145,770.05
78€196,243.76€189,288.17€181,836.86€173,394.14€163,991.30
79€211,339.44€205,062.18€198,367.49€190,733.55€182,212.56
80€226,435.11€220,836.20€214,898.11€208,072.97€200,433.82
81€241,530.78€236,610.21€231,428.74€225,412.38€218,655.07
82€256,626.46€252,384.22€247,959.36€242,751.80€236,876.33
83€271,722.13€268,158.24€264,489.98€260,091.21€255,097.58
84€286,817.81€283,932.25€281,020.61€277,430.62€273,318.84
85€301,913.48€299,706.27€297,551.23€294,770.04€291,540.10
86€317,009.15€315,480.28€314,081.86€312,109.45€309,761.35
87€332,104.83€331,254.29€330,612.48€329,448.87€327,982.61
88€347,200.50€347,028.31€347,143.10€346,788.28€346,203.86
89​
€362,296.18€362,802.32€363,673.73€364,127.69€364,425.12
 
As a matter of interest, did you factor in the extra €10 a week that pensioners get after they turn 80, in the above tables!
 
Is the over age 80 increase a flat 10 euro increase regardless of the portion of the pension a person has ?

Would an 80 year old person with a pension of 100 euro per week get the full 10 euro ?

I don't think the extra 10 euro would change the break even age for a person who would have qualified for full pension at age 66 but decided to deferr until age 70.



There might be a longer break even time if the pensioner was living alone. The living alone allowance is 22 euro per week.

If this person deferred until age 70 they could be at the loss of an extra 22 euro per week for 4 years.

Possible extra 4576 euro loss.

Certain Island dwellers might also have a higher break even age.
 
Last edited:
So basically they uprated the basic state pension by €12 a week or 4.3%. But instead of increasing the rates for drawing down at 67-70 by 4.3% they increased them by the same €12 a week. So the rate to delay til 70 is only by up 3.6%.

This results in an increasingly smaller incentive to delay drawdown. The actuarial treatment was already pretty brutal with breakeven rates in the late 80s.

This is either staggering ignorance or a perverse kind cost-saving from the Department of Social Protection.
 
Dr Strangelove said:
This is either staggering ignorance or a perverse kind cost-saving from the Department of Social Protection.
Click to expand...
It's not exactly top secret that the government is looking to reduce the cost of pensions. This works by reducing the direct cost, while also increasing revenue by prolonging the working life of the person deferring retirement.

Actuarially nobody should defer. But some people either want to work longer anyway or believe they need a higher income in retirement.
 
SquirrelChaser said:
Actuarially nobody should defer.
Click to expand...
People who have less than 2080 Reckonable contributions at age 66 can have shorter break even times which make deferral worthwhile.

There can be major advantages for people who are marginally short of a higher averaging band to defer.

In many cases these people might only need to defer to the 1st January of the year after their 66th birthday to gain a major increase in their pension.

There is also an opportunity for deferers to claim Jobseekers benefit after age 66.
 
TheJackal said:
2025 State Pension (Contributory) Rates (all up €12 weekly)
Break Even age now at 89

Age when you start to claimMaximum rateper yeardiff v 66
Age 66€289.30€15,095.67€0.00
Click to expand...
Is this correct?

€289.30 x 53 (to account for the double Xmas payment) = €15,333
 
Dr Strangelove said:
This is either staggering ignorance or a perverse kind cost-saving from the Department of Social Protection.
Click to expand...
It's stealth erosion.

There are many examples of this.

The 9k transferrable 20% tax band between married couples hasn't been increased.

The age tax credit hasn't been increased.

The household benefits electricity allowance hasn't been increased.
 
S class said:
It's stealth erosion.
Click to expand...
I could accept it if there was some rationale (like increasing life expectancy) but it just looks like DSP never liked the option to delay in the first place and are just chipping away at it and hoping no one notices.

Almost no one seems to have noticed it but the state pension contributory has seen an inflation-adjusted decline over the last number of years too:


earWeekly Rate (€)CPI Index LevelAdjusted Weekly Rate (€)
2015€230.30100.3€229.66
2016€233.30100.3€233.30
2017€236.00100.7€234.62
2018€240.00101.2€237.15
2019€248.30102.1€243.01
2020€248.30101.8€243.82
2021€248.30104.2€238.00
2022€256.30112.3€228.77
2023€265.30119.4€222.78
2024€277.30122.5 (11 months)€226.36
 
Dr Strangelove said:
Almost no one seems to have noticed it but the state pension contributory has seen an inflation-adjusted decline over the last number of years too:
Click to expand...
Very few people notice.

Our education system churns out people who are experts in theoretical mathematics.

These people are generally clueless about practical mathematics.
They don't understand the basics of personal finance, taxation, inflation etc.

This majorly of the population are easily fooled by the government.

Practical mathematics. financial planning and all aspects of money handling should be taught in our schools as a separate subject.
 
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