Statutory Pension: Homemaker & return to work benefit

D

Dave Byrne

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With respect to increasing your state contributory pension, would it benefit a person currently raising children (thus eligible for the homemakers scheme) to return to work (while the children are still under 12)?

Thanks
 
Not really. So long as you have a child under the age of 12 you get Credits added to your record under the Homemakers Scheme. These Credits are as good as Contributions. There is a limit to the amount of Credits you can get (1080 or 20 years).
 
Conan said:
Not really. So long as you have a child under the age of 12 you get Credits added to your record under the Homemakers Scheme. These Credits are as good as Contributions. There is a limit to the amount of Credits you can get (1080 or 20 years).
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Do you receive credits though? Citizen Information states "Homemaking years can be disregarded for state pension (contributory) purposes". Which is not the same as receiving credits pari passu with working contributions.

Say you work 10 years (18 to 28) and are a homemaker for 20 years (28 to 48) and neither for the remainder (48 to 68).

Under the averaging treatment, is it
-you've worked 1/3 of your working life (10 years of 30 where you weren't a homemaker) = 1/3 of a state pension
or
-you've worked 3/5 of your working life (10 + 20 years when you were either working or a homemaker) = 3/5 of a state pension

Under total contributions treatment, is it
10 years or 30 years of contributions
i.e. Awarding 1/4 or 3/4 of a state pension (where 40 years of contributions is required for a full pension)?
 
I would suggest return to work when you feel the children are old enough for you to do that. You may wish to return to work for reasons other than securing a full pension.
You may need carers leave to care for a family member or elderly relative at a later stage. This would be part of the 20 years allowed.
 
Black Sheep said:
I would suggest return to work when you feel the children are old enough for you to do that. You may wish to return to work for reasons other than securing a full pension.
You may need carers leave to care for a family member or elderly relative at a later stage. This would be part of the 20 years allowed.
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The reference to elder care is something I hadn't considered (thanks) but my questions are really around the mechanics of the Homemakers scheme's treatment for prsi contributions and setting to one side one's wishes to re-enter paid employment or not.
 
Dave Byrne said:
Do you receive credits though? Citizen Information states "Homemaking years can be disregarded for state pension (contributory) purposes". Which is not the same as receiving credits pari passu with working contributions.
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This is the treatment for calculating yearly average, under the average approach.

To calculate the Total Contributions Approach, these are replaced with HomeCaring Credits: https://www.citizensinformation.ie/...insurance_prsi/homecaring_periods_scheme.html
.
 
Dave Byrne said:
Say you work 10 years (18 to 28) and are a homemaker for 20 years (28 to 48) and neither for the remainder (48 to 68).
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This is my understanding of it, but I have only looked at this recently and I might be completely wrong.

State Pension Contributory New Total Contributions Approach with HomeCaring Credit Detailed Questions and Answers: 23rd January 2018



You will get the higher of the following :

The Yearly Average Approach - the original system

total contributions and credits/ Number of years working

Paid contributions: 10 x 52 = 520
Homemaker credits: 20 x 52 = 1040
Total contributions: 1,560
Total years from start of work to end of work: 50
Average contributions: 31.2

Aggregated Contributions Method - the new method

You get a pro-rata amount based on 40 years maximum.

Paid: 10 years
Home maker: 20 years
Total 30 years
= 75% of 40 years maximum

So she would get 75% of the full pension.
 
Last edited:
If you are only claiming credits under the original Homemakers Scheme, then you can get a State Pension based on the higher of the “Totals and Average” basis or the ”Total Contribution Approach “.
If however you are claiming credits under the Home Caring Periods Scheme then you can only claim a State Pension based on the Total Contribution Approach- the 1/40 model.
 
Is the Homemakers Scheme still only effective for credits from 1994 or was that changed by any chance.
 
Brendan Burgess said:
This is my understanding of it, but I have only looked at this recently and I might be completely wrong.

Paid contributions: 10 x 52 = 520
Homemaker credits: 20 x 52 = 1040
Total contributions: 1,560
Total years: 50
Average contributions: 31.2

Or under the Aggregated Contributions Method

You get a pro-rata amount based on 40 years maximum.

Paid: 10 years
Home maker: 20 years
Total 30 years
= 75% of 40 years maximum

So she would get 75% of the full pension.
Click to expand...


I thought from my reading of it a good while ago Brendan that 40 years was the denominator, no?
 
Q12. What will my rate of payment be under the Total Contributions Approach?

This will depend on your paid contributions, your HomeCaring credits, and any other credited contributions you have (e.g. from periods in receipt of Jobseekers benefit).

40 years contributions are required for a maximum rate pension entitlement, however these do not all have to be paid contributions. You may use up to 20 years of HomeCaring Credits, and up to 10 years of non-HomeCaring credits (although the combined total of credits may not exceed 20 years).

This total is added to your paid contributions, to give your Total Contributions. If these amount to or exceed 40 (e.g. 20 years paid contributions, 12 years HomeCaring credits and 8 years Jobseekers Credits), you qualify for a maximum rate pension (currently €238.30).

If however you have a lesser record, you would get a pro-rata amount.

For example, if you had 36 years (e.g. composed of 16 years paid contributions, 10 years HomeCaring credits, 10 years Jobseekers credits), your pro-rata entitlement would be 36 divided by 40, i.e. 90%. Whether this would be a greater or less amount than under the current system would depend on a number of factors, but whichever is the greater payment will be the one paid to you.
 
Brendan Burgess said:
Q12. What will my rate of payment be under the Total Contributions Approach?

This will depend on your paid contributions, your HomeCaring credits, and any other credited contributions you have (e.g. from periods in receipt of Jobseekers benefit).

40 years contributions are required for a maximum rate pension entitlement, however these do not all have to be paid contributions. You may use up to 20 years of HomeCaring Credits, and up to 10 years of non-HomeCaring credits (although the combined total of credits may not exceed 20 years).

This total is added to your paid contributions, to give your Total Contributions. If these amount to or exceed 40 (e.g. 20 years paid contributions, 12 years HomeCaring credits and 8 years Jobseekers Credits), you qualify for a maximum rate pension (currently €238.30).

If however you have a lesser record, you would get a pro-rata amount.

For example, if you had 36 years (e.g. composed of 16 years paid contributions, 10 years HomeCaring credits, 10 years Jobseekers credits), your pro-rata entitlement would be 36 divided by 40, i.e. 90%. Whether this would be a greater or less amount than under the current system would depend on a number of factors, but whichever is the greater payment will be the one paid to you.
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On the transition between the old average and the new TCA calcs Brendan, it is said you get the higher of the two calculations. Do you know how long that trsansitional arrangement goes on for?
 
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