Does anyone have a link explaining what exactly the relationship between PRSI contributions and sate pension entitlements are then ? Could being unemployed for a month between jobs have a significant impact ?
To qualify for a State Pension (Contributory) you must be aged 66 or over and have enough Class A, E, F,G, H, N or S social insurance contributions.
You need to:
- Have paid social insurance contributions before a certain age
- Have a certain number of social insurance contributions paid and
- Have a certain average number over the years since you first started to pay
1. Paid insurance before a certain age
You must have started to pay social insurance before the age of 56. (The age limit is higher for people born before 1922.)
Entry into insurance
Your entry into insurance means the date on which you first started to pay social insurance.
The rules that determine when you entered into insurance are quite complex for those with mixed insurance, that is, full social insurance for some of the time and modified at other times.
Normally the date of starting insurable employment is taken as the date of the first paid employment contribution.
However if you have a mixture of full- and modified-rate contributions and paid your first full-rate employment contribution before 6 April 1991 and before you reached 56 years of age, your entry into insurance can be the date on which you first started to pay the full-rate of insurance if that would be to your advantage.
If you started to pay full insurance after 6 April 1991, your entry into insurance is the time you first paid any social insurance.
There are also special entry into insurance rules for self-employed people. If you started to pay self-employed contributions on 6 April 1988 and had previously paid employee insurance at any time, then the date of entry into insurance can be either 6 April 1988 or the date on which you actually first paid insurance, whichever is to your advantage.
2. Number of paid contributions
If you reach pension age on or after April 6 2012, you need to have 520 full-rate contributions (10 years contributions). In this case, only 260 of the 520 contributions may be voluntary contributions.
However, if you were a voluntary contributor on or before April 6 1997 and you have a yearly average of 20 contributions, you may meet the requirement if you have a total of 520 full-rate contributions (of which only 156 need to be compulsory paid contributions).
If you reached pension age on or after 6 April 2002, you needed to have 260 full-rate contributions (effectively 5 years contributions but they need not be consecutive).
If you reached pension age before 6 April 2002, you needed 156 qualifying full-rate contributions (a total of 3 years but they did not have to be consecutive).
Note that social insurance contributions fall into the four groups below.
Full-rate social insurance contributions are PRSI contributions at Classes A, E, F, G, H, N and S or at the 'ordinary' rate before 6 April 1979.
Modified-rate social insurance contributions are PRSI contributions at Classes B, C and D (paid by civil and public servants).
Voluntary contributions are made by people under age 66 who are no longer covered by compulsory PRSI provided they satisfy certain conditions.
Credited contributions ('credits') are similar to the social insurance contributions you pay while employed and are usually awarded at the same rate as your last paid social insurance contribution. You may get credits when you are claiming a social welfare payment. Credits are not allowed after self-employed contributions (Class S).
3. Average number of contributions per year
You must meet the average condition. This is probably the most complex aspect of qualifying for a State Pension (Contributory).
Normal average rule
The normal average rule states that you must have a yearly average of at least 10 appropriate contributions paid or credited from the year you first entered insurance or from 1953, whichever is later to the end of the tax year before you reach pension age (66). An average of 10 entitles you to a minimum pension; you need an average of 48 to get the maximum pension.
Alternative average rule
This alternative average only applies to people who reach pension age on or after 6 April 1992.
It requires that you have an average of 48 Class A, E, F, G, H, N or S contributions (paid or credited) for each contribution year from the 1979/80 tax year to the end of the tax year before you reach pension age (66). This average would entitle you to the maximum pension. There is no provision for a reduced pension when this alternative average is used.
So, if you reach the age of 66 on or after April 6 1992, your average will be looked at in two ways - the usual average will be assessed and the alternative average will be assessed. Most employed or formerly employed people will be able to meet the alternative average. The alternative average will probably be looked at first because it is easier to assess. If you do not have an average of 48 contributions from 1979 then the normal method of assessing the average will be looked at and you may get a reduced pension (if you do not meet the alternative average, it is virtually impossible for you to have an average of 48 using the normal average rule).