Does actuarial reduction apply to the Old Age Pension at 65/66

[buzybee]

I am a member of the post 2004 pre 2013 scheme. If I retire at 62, I ger 83.6% of my pension. This 83.6% is applied to the pension throughout my life.

I know that I would get the civil service pension actuarially reduced from 62 to 65.

However, I would get the transition payment at 65 and then the Old Age Pension at 66 along with the actuarially reduced civil service pension.I have worked in the private sector before joining the civil service so I have the prsi contributions.

Would the transition payment and the Old Age Pension be subject to the actuarial reduction of 83.6%?

I know that people getting the supplementary pension from 65 to 66 (who don't have enough prsi contributions to qualify for the transition and OAP) would get this actuarially reduced as this is paid from the civil service.

Thanks

 

[Ruffian]

The State Pension (and over-65 payment) is based on your total PRSI record. The CNER actuarial reduction does not impact it.

 

[DingDing]

There are conditions to the payment 65-66 which you may not meet unless you are working.

Payment for people who retire at 65

If you retire at 65, you may qualify for a benefit payment until you reach 66. The payment is similar to Jobseeker’s Benefit, but you don’t need to be looking for work or sign on at your local Intreo centre.

www.citizensinformation.ie

Details above, you need PRSI contributions in the relevant year. You probably won't have these.
It is no longer called the transition payment; this was one of the previous schemes which ceased a few years ago.

If you don't get it your supplementary pension will continue with the actuarial reduction until you get the state pension.

If your state pension is less than your supplementary pension, your supplementary pension will bridge the gap, I would expect the actuarial reduction to continue to apply.

 

[buzybee]

Thank you for this. I am hoping that I will pay for the prsi contribution between 62 and 66 if I am not working. I have full prsi contributions since I was a teenager and never took time out at home. I would hope to finish work in spring when I am 62.5 so that I get 12 weeks contribution and then pay for the years 63 to 66. I slso have a small avc which I would draw down.

 

[Ruffian]

If your state pension is less than your supplementary pension, your supplementary pension will bridge the gap, I would expect the actuarial reduction to continue to apply.

It would be a rare situation in which the State Pension is less than the supplementary. The possibility that comes to mind of hand is of someone only being in both the PS and the PRSI system for a few years in the course of their life and therefore not meeting the minimum requirement for the State Pension at all. Perhaps it might be possible also for someone in a fast accrual pension stream - don't know about that.

 

[buzybee]

I think the State Pension would be less than the supplementary if a person didn't work at all for years e.g. stay at home spouse, or worked outside Ireland during this time, and then only joined the PS at e.g. 50 years old.

Most people in my work joined the PS at e.g. 30 or 40 years old, having worked in the private sector in Ireland since leaving school or college.

It is a pity to fall down on contributions for the last few years, just because a person wants to retire early.

My birthday is in October so for the 65 year old payment, the governing year is the year I turn 63. I would need to work for part of this year, obtaining maybe 13 weeks contributions. This would mean retiring in April whem I am 62.5 years.

 

[Ruffian]

I think the State Pension would be less than the supplementary if a person didn't work at all for years e.g. stay at home spouse, or worked outside Ireland during this time, and then only joined the PS at e.g. 50 years old.

Not really.
Once you have 10 years of qualifying PRSI contributions you will get the State Pension. If someone works 10 years in the PS (and has no other PRSI) they will, at a minimum, qualify for 10/40 of the State Pension. For 10 years service exactly in a standard PS scheme the Supplementary would be 10/40 of the State Pension. So the State Pension will not be less than the Supplementary. The same applies for any length of service greater than 10 years.
The issue may arise though for shorter service in the public sector if the person has no other qualifying PRSI contributions.

 

[S class]

Thank you for this. I am hoping that I will pay for the prsi contribution between 62 and 66 if I am not working. I have full prsi contributions since I was a teenager and never took time out at home. I would hope to finish work in spring when I am 62.5 so that I get 12 weeks contribution and then pay for the years 63 to 66. I slso have a small avc which I would draw down.

If you want to qualify for Benefit Payment 65, your 13 weeks of paid contributions can be in any year starting from the calendar year of your 61st birthday. So you are covered for this if you retire at age 62.5.

You then only need a minimum of 39 class A paid or credited contributions in the calendar year of your 63rd birthday.
Voluntary contributions are not allowed in this case.
Jobseekers credits are allowed.

If you want to optimise your situation you should....

When you retire apply for Pay related Jobseekers Benefit.
This is 450 euro for 3 months, 375 euro for 3 months and 300 euro for 3 months. (This scheme is available to workers ceasing employment after 1st April 2025)

When the payments stop continue signing on for Jobseekers credits up to age 65.

At age 65 apply for Benefit Payment 65.

This takes you up to age 66. You are given Jobseekers credits alongside this payment. Currently this payment is 244 euro per week.

This plan will ensure that there is no break in your Prsi record.
You will receive Jobseekers credits up to age 66 at no cost.
There is no need to pay voluntary contributions.