State Contributory Pension - transition to TCA from 2025

So why are they not allowed to make voluntary contributions to make up the shortfall? As far as I know most countries allow that. It would give those folks at least a part pension and some return for their paid PRSI contributions.
 
So why are they not allowed to make voluntary contributions to make up the shortfall?

Because there's no current provision for this in the legislation.

So, if you - and others - want this facility to be added, then why not contact your local TD and ask him/her to start lobbying for it?

Or, better still, if you're in a Trade Union, then tell them to start lobbying for it. Sinn Fein love to promise populist, vote winning stuff so they'd probably be delighted to run with this one.
 
What was grossly unfair about the average contribution system was that it was possible for someone to get a full state pension with just 10years contributions provided they only worked in those 10 years and didn't work and pay prsi in any other period, for example if someone came to ireland started working at age 55 and retired at 65, they could have accumulated the miminum 520 contributions and their average contributions were also maximised so a full state pension. Albeit very few people would have qualified as in this example, however many immigrants would have approximated this work pattern and were highly advantaged by this system. Whereas an irish emmigrant that worked for a year after school, immigrated to another country for say 15, 20 years and then returned at say 40 years of age and payed another 25, 30 years contributions was only entitled to a much smaller pension as starting prsi contributions after school would have brought their average contributions way down. How such unfair anomalies were allowed to persist for so long beggars belief
 
It does not matter if a person gets a tenner or the full pension. The system is already in place. There are no further costs involved.

There are over 6,000 people working for the Department, to run all the current schemes, including the pensions. I've no idea how many of these 6,000 work on the pensions. If the system is already in place, why do we need employees? Do you seriously think that you can suddenly enable thousands more people to claim a small pension and there will be no further costs involved? No staff costs. No postage. No bank charges. No further costs at all? Who would answer all the additional queries?

Separate point - what about the cost of the actual pensions?
 
Some cut-off is reasonable but ten years seems far too high.

For sure there would be an admin cost but much of this is at eligibility stage. A greater part of the admin cost of the current system is down to it being paid weekly and available in cash in around a thousand post offices around the country. Saying this out loud is taboo…..
 
I will hit 66 in Dec 2026. My reading is that I am entitled to 80 percent based on the yearly average and 20 percent on tca. The word transition really worries me. Does this mean I continue to transition to 70 30 , 60 40, 50 50 etc over the following years or is.my pension fixed at the rate I get when I reach 66
 
No. The pension is then fixed going forward
 
Separate point - what about the cost of the actual pensions?
Anybody who is subject to the compulsory insurance charge on their Irish employment income (Prsi), should be entitled to the benefits of this insurance.
The system of excluding large numbers of insurance payers is totally unfair.

What about the cost of the pension paid to the person with 520 contributions ?
 
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In the US, you generally need to have paid social security taxes for at least 10 years to qualify for retirement benefits. So, we’re hardly out of line with international norms in that regard.

Personally, I don’t think the 520 minimum stamps requirement could be reasonably characterised as “unfair”.
 
Anybody who is subject to the compulsory insurance charge on their Irish employment income (Prsi), should be entitled to the benefits of this insurance.

They're eligible for any other insurance benefits that their class of PRSI provides.


What about the cost of the pension paid to the person with 520 contributions ?

The system as it currently stands provides pensions to such people. There's a cost to the State for that. My argument is against increasing the cost to the State by reducing or eliminating the minimum PRSI period, thus giving State pensions for life to a lot more people than are currently eligible.

It does not matter if a person gets a tenner or the full pension. The system is already in place. There are no further costs involved.

My reply you're quoting was arguing against the above point that "there are no further costs involved". Of course there would be further costs involved.
 
My reply you're quoting was arguing against the above point that "there are no further costs involved". Of course there would be further costs involved.
There are some costs when the pension application comes in. Someone has to deal with that and get paid for the job. But after that a lot is computerized and set on automatic. Give it ten years and most of the job- if not all- is done by AI.
 
I believe the current Contributory Pension scheme discriminates against people like me - let me illustrate this by way of an illustrative story – loosely based on my facts. I don't believe this discrimination was intentional and it can be easily corrected. Let's suppose 3 individuals travelled to Ireland on the same flight on Jan 1st 2000, and each finds a long term job for the next 25 years in the same location and each retires at the end of 2025, with exactly the same employment history for that these 25 years.

Individual A (Jim)
  • Jim had previously never been to Ireland prior to this.
  • Here worked continually for 25 years and retired at the end of 2025.
  • Based on the current contribution rules, Jim would be entitled to a full Irish Contributory Pension - based on 25 years of contributions and an employment record of 25 years.
  • Therefore Jim gets a 100% contributory pension.
Individual B (Pat)
  • Pat, born and bread in Ireland.
  • He lived and worked in Ireland for 5 years before emigrating in 1990. His work was “cash in hand” and not recorded on the system.
  • After returning to work in Ireland he worked "side by side" with Jim until he two retired at the end of 2025.
  • Based on the current contribution rules, Pat would be entitled to a full Irish Contributory Pension - based on 25 years of contributions and an employment record of 25 years.
  • Therefore Pat also gets a 100% contributory pension.
Individual C (Mary)
  • Mary they lived and worked in Ireland for 5 years before emigrating in 1990,
  • When Mary worked it was “Through the system”.
  • Mary worked in a similar job to Pat for these 5 years - however she paid PRSI contributions for the period whilst Pat did not.
  • Based on the current contribution rules, Mary would NOT be entitled to a full Irish Contributory Pension - her pension would be based on 30 years of contributions and an employment record of 40 years)
  • Mary would loose out on 25% of their contributory pension – because she had worked in Ireland for 5 years and paid PRSI contributions.
  • Mary would only receive 75% of a contributory pension - although she had done exactly the same work as her colleagues, Jim and Pat for the previous 25 years.
So the only one of the 3, who had paid contributions, actually looses out - this cannot be fair?
  • The system discriminates against Mary as she worked for 5 years and paid her contributions.
  • In my view our system should never discriminate against anyone who worked and paid their contributions?
  • I appreciate the pension system is being changed currently - but the current changes will not fix the above mentioned discrimination.
Mary's situation, is similar to mine and to many Irish people who lived out of the country for a few years (or longer) having started work in Ireland. In my case my work was part time whilst in college - and this would be similar to a lot of others who emigrated in the various recessions in Ireland.

What to do about it?
  • I think a small legislative change could fix it – to exclude the number periods when the person was not available for work (due to being out of the country, etc) from the calculation.
  • Then in the case of Mary, her total contributions would be based on the 30 years (25+the initial 5 years) and the denominator (the cause of issue) would be adjusted to 30 (excluding the 10 years working abroad), thus treating Mary the same as the others.
  • Easily done – and eliminating the unintended discrimination.
Any thoughts from anyone?
 
In this case I am Mary. I’ll end up with about 85% of the COAP under TCA.
Under the 10 year transition rules it will be slightly more.

My wife is Jim, born in England and moved to Ireland for the first time with me in 2000. By the time she becomes entitled to the Irish COAP she will have a similar entitlement to me (about 85%) with no option to increase the benefit amount other than deferment of her pension.

In mitigation we are working to maximise the UK state COAP so not too dis-satisfied overall.
 
I'm also similar to Mary so agree the current system is just bizarre and unjust even though I'll probably end off with slightly less under the TCA approach but at least it seems fairer.
 
You're making suggestions for future legislative changes based on issues with a system that is already being phased out anyway.
 
The current system advantages some people considerably relative to others based on when they started their prsi contributions. It is being fazed out over next decade, however people can still choose to use the average contributions systems over the next decade if it gives them a higher pension. I think this should have been phased out much faster as some people are still qualifying for full state pensions with only 10 to 15 years prsi contributions because they were lucky enough to only start paying prsi in Ireland very late in their career. Why was this ever allowed in the first place, anyone in this situation should have at most received 50% of full pension. It is grossly unfair to someone who worked a full career with 40 years of contributions
 
I wonder if there would be any chance of somebody taking a succesful case against the state for blatent discrimination ?
 
I think pension changes here, as in the UK and many other countries, use a phased approach over 10 years as it's unfair to make significant changes faster when those coming close to retirement have plans in place and no time to pivot based on new rules.

The phasing out of the average contribution method, in my opinion, is going to save the taxpayer billions after 2035 due to the recent surge of immigration and massive future numbers of people with little more than 10 years contributions compared to historic averages.
 
I wonder if there would be any chance of somebody taking a succesful case against the state for blatent discrimination ?
Under EU law, discrimination based on sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation is prohibited.

Based upon which of these factors set down in law does the average contribution method discriminate?