How did they calculate this Contributory Old Age Pension

Hi,

I am trying to help out a family member who is at retirement age. She applied for the contributory pension and was told that she will get 260.60 per week. However, we don’t understand where that came from and it’s slightly less than expected.

Her scenario is not straightforward and the system is complicated with the information scattered across a number of locations. It’s a pity they don’t explain the rationale behind the decision.

She started working in 74/75 and had 5 years with partial A Contribution years up to 78/79.
She then had gaps for 2.5 years to 81/82 but started teaching on Class D contributions from 81/82 to 89/90.
From 90 to about 96/97 she was a stay at home Mother so qualifies then for the home caring credits for those periods.
She went back teaching, usually working short term assignments from 97 to 2006. She had Class A contributions there. Those years had partial contributions. However, she got Mothering Credits to fill those years up.
In 2007, she started her own business and has full S Contributions from then to date.

From her Contribution Statements, I can see that she has

• 1396 Pension Contributions
• 8 Home Making and 499 Home Caring Credits
• 416 Modified Contributions (Class D)

The first two lines - 1405+8+499 - give her 1903 Contributions

I have the following questions.

(i) I expected all of her contributions to age 66 to be included but they are not considering contributions in 2025. That would give her about 9 extra contributions that DSP are not including. Should they be included?

(ii) My understanding is that as she is getting Home Caring Credits, she is on the Total Contributions Approach and cannot use the Yearly Average. ( The yearly average might not help as she started paying PRSI contributions 51 years ago).

I expected her to get 1903/2080 x full pension (289.30) = 265.93. Is that correct? Even if the 1912 is wrong, should she not get 1903/2080*289.3 = 264.68.

The 9 x 2025 contributions would increase that slightly. The 260.60 that she is getting seems to me to be equivalent to about 1873.65 contributions.

(iii) I thought that the Class D contributions would be used in some way – not fully but partially. There was talk somewhere of notional credits for “Modified Contributions.” I cannot figure out how that would work. It seems that for the TCA approach, modified contributions do not count.

Can anyone help me understand and explain to her where the 260.60 per week decision comes from. I am assuming its right but I cannot see where it comes from. Its seems to me that it’s a bit low and should be around 266. Not much but a difference nonetheless.

My understanding is that they give you the best options of the various permissible ways of calculating the pension.

Thanks in advance,

You might be thinking of Mixed Contributions. Its a bit complex, but try the formula in here and the qualifying conditions...

The 416 class D are not counted.
Are these included in your total of 1396 ?
Did they show the yearly average ?
The calculation is probably 90% YA + 10% TC.

The 1396 does not include the 416 D Class.
From what I recall, they didn't show the yearly average. I can double check that.

Where does this 90% YA + 20% TC come from?
From what I can find on Citizens Information -
" If you qualify for the Home Caring scheme, the Department of Social Protection (DSP) calculates your State Pension (Contributory) using the Total Contributions Approach (TCA), also called the ‘Aggregated Contributions Method’. This means they count your total number of social insurance contributions, rather than calculating your yearly average.."
If you have less than 2080 contributions, then you get a proportionate pension.
That doesn't seem to be applied here.

That should have been 90% YA +10% TC.
YA is being phased out.
In 2024 it was 100% YA
In 2025 it is 90% YA + 10% TC (if YA is higher than TC)
and so on....

Contributions in the year of the pension claim are not counted for the YA calculation, but they are counted in the TC calculation.

If the YA calculation is greater than the TC calculation, the 90% + 10% is used to give a higher pension than 100% TC.

It's all very complicated. Did the pension award statement not explain the calculation method.

Homemakers scheme disregards years for the yearly average calculation.

The home carers scheme adds credits for the total contributions scheme.

The 8 home making are presumably 8 years.

The 8 home making were contributions.

From Citizens information
Table showing how State Pension (Contributory) is calculated from 2025 using Method 1 OR Method 2 (you will get whichever is greater)


So where TCA is higher, then it should be TCA given that "you will get whichever is greater."
In this case TCA is higher - 1903 (or 1912)/2080 * 289.30 = 264.68
Not 260.60 that they came up with

Am I wrong in that?

Is there a section near the start of the statement along these lines.

If so what total reckonable paid and credited contributions are shown ?

"According to your record of social insurance contributions (attached), you have a total of xxx reckonable paid and credited contributions from 19xx to 20xx, giving you a yearly average of xx."

aamstudent said:

From her Contribution Statements, I can see that she has

• 1396 Pension Contributions

Click to expand...

There isn't a column called "Pension Contributions" on a Contribution Statement, so would you please confirm that 1396 is the total shown at the bottom of the column on the extreme right of her Contribution Statement with the title:


Thanks.

@S class There is no section with the wording you gave.
All it says is "We have awarded you the best possible rate based on the social insurance record we hold for you".

@Marsupial There are no totals on the the Social Insurance Record.
I added the reckonable paid (1304) and the reckonable credited (92) to get 1396.

They should appeal the decision.
It's seems like the calculation is wrong.

.

When did you request the contribution record? I requested one yesterday and compared it to one I got in 2018 which I knew had no totals - the new one has a total row which wasn't on the older one and a new column with a combined total reckonable and credited. Someone more familiar with the system may know if these are recent additions.

@S class
i agree about the appeal.
She was given two options. (i) review (ii) appeal.
You can do both - appeal while waiting for the outcome of the review.
I just wanted to be more confident that the decision looked off.

@insomniac
what came with the decision was not actually the contribution statement but a Social Insurance Record.
She had the CS from before and it hasn’t changed. It had the columns you mentioned and totals.
The SIR has similar columns but additional columns for homemaking. It doesn’t have totals.
Given that it’s part of a decision letter, it may well be customised to her circumstances.

aamstudent said:

She was given two options. (i) review (ii) appeal.

Click to expand...

Review means that they'll recheck all of their calculations.

Appeal means that they're revisit the file in much more detail but you need to provide grounds for the appeal - and there's a strict time limit.

In your case, you could simply say that the calculations appear to be erroneous and send in your own as grounds for appealing.

In my case I sent an email as soon as I received the calculations from dept of Social Protection.

I asked numerous questions clearly and numbered each question
I said some of the questions may not make sense depending on the reply to the previous question.

All questions were answered promptly.

However there were numerous mistakes in varying calculations
One question I asked at least 6 times was the fact that I appeared to have been left short Homemakers credits for the year the tax year changed from April to January.
It took at least 6 questions to get an admittance that I was left short.
However this balanced out as I was given credits for year of entry which was a year too early and which I hadn't notice.

I presumed my questions would prompt a review which it didn't.
You have to specifically request a review.
At that stage as I was running out of time I requested both a review and an appeal.

It was the review that flagged the credits for a year before they were due which counter balanced with the shortage of home makers credits so I expected that the appeal wouldn't change anything and it didn't
However it took from mid August 2022 until the following July 2023 for the outcome of the appeal.

In your case I would submit an email with all your question. Then look for a review and following that appeal if necessary.
If your running out if time do all 3 together.
Not sure why one is only allowed 20 days to appeal and yet it took almost 11 months for the appeal outcome.

Two other things that are worth considering are:-

1. Get the pension applicant (you can't do it, and that applies to requesting a review/ making an appeal too, unless she has given you authority to act on her behalf) to make an FoI application for copies of all documentation on her file relating to the calculation of her contributory pension. Good info. on making the appeal is here: https://www.gov.ie/en/service/588f7f-freedom-of-information-guide-contacts/

2. Consider is whether or not she wants to request a personal hearing - she can bring someone along to this to argue the case. This means that you will appear in front of an (independent) Appeals Officer and can go through your calculations with this individual (which is where the FoI documentation is very helpful, because you and the DSP representative will both have all of the relevant documents in front of you.)