The more flexible contributory state pension. Is it a good deal ?


The ratios are: 100%; 98%; 90%; 85%; 65%; 40%

So as the full increase for 2024 is €12 per week, lower level weekly increases will be:

40-47 weeks average: €11.76;
30-39 weeks average: €10.80;
20-29 weeks average: €10.20;
15-19 weeks average: €7.80; and
10-14 weeks average: €4.80.


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PECS will count for the same pension benefits as paid contributions, provided you already have the minimum of 520 full rate paid contributions and have not reached the 2080 level.

The only other reason that could prevent them from counting would be if you have reached the maximum level of 520 (or 1040 if home caring is included) credited contributions already.
 
Des Pondent said:
Deferring claiming at 66 doesn't look like a good deal for those who qualify for a full contributory pension at that age and can afford to retire, or am I missing something ?
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For me as someone who (hopefully) will be able to claim the OAP at 66, it's most definitely not a good deal and I'd advise against anybody availing of it
From the Government's point of view it's a great deal simple because they will in the vast majority of cases pay out less in overall pension to those foolishly enough to defer their entitlement at 66

I doubt very much this is going to happen in Ireland simply because the whole idea of these changes is to reduce the overall spend on state pensions and giving people an earlier retirement option even though the overall pay-out might be less then the normal pension it might actually increase due to the number of people availing of it

They do operate this system in America with options to retire at 62, 67 and 70 and the rates are $2572, $3627 and $4555

Unfortunately with these things nobody knows how long their going to live, I personally feel I'm not going to make it to eighty simply because of my family history and my lifestyle choices but Mrs C has a cousin who is entitled to the American pension and has decided to defer till 70
When asked why she replied "My doctor has said I've a very good chance of living well into my nineties so I'm going to need the extra money"
 
Slightly off topic question.
If you’re under 66 and in receipt of an occupational pension, will you be liable for PRSI on it from January ?
 
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Yeah I will have by my reckoning ca. 39 years of contributions when I hit 66, but as you say they may disregard the contributions made in my 66th year (though hopefully that anomally will be banished with these changes anyway). I am currently a voluntary contributor already and have been for a few years now as I am no longer an employee. I have no remaining gaps to fill that I can fill at this stage.

It's very tight, hence it would be advantageous to know if I will be entitled to PECs (especially seening as I started working before I was 16, though not full time) and if the contributions paid in my 66th year will count (I was born in late November so this could work against me) before I either apply for the COAP or defer and continue to pay the €500 for another year or two. I suspect that deferal will not be a good idea as I am forgoing the 13k a year and that as you say takes a long time to claw back. I think I'd probably prefer the 38 or 39/40ths of the full pension from my 66th birthday.

Still I have quite a few years to see how this all plays out. I'm only 45.
 
You're only 45 - and that figurehead of Sinn Fein intellectualism, Louise O'Reilly TD has promised that as soon as she and her mob take control, the pension age will reduce to 65 again. And who can say what other treats the future may have in store for you and other potential pensioners in the course of the next 20 years? Not worth losing sleep over. The main thing - for you and for all of us - is to keep on paying those voluntary PRSI contributions.
 
Billybob said:
Slightly off topic question.
If you’re under 66 and in receipt of an occupational pension, will you be liable for PRSI on it from January ?
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Occupational pensions are class M Prsi and this is zero rated. No Prsi is actually paid.
This won't change after January 2024.
 
If the same rules apply at your retirement time, you could defer your
your pension until the 1st of January in the year after your 66th birthday. The wording of the pension calculations state that all Prsi is counted until the final full year before you claim your pension.
Doing this would get your contributions for your 66th year counted and only cost you a few weeks pension loss.
Currently you can't make voluntary contributions for your 66th year.
You would have to make sure that this rule is changed to allow voluntary contributions to be made for any full years before the date of claiming the pension up to age 70.
 
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S class said:
Occupational pensions are class M Prsi and this is zero rated. No Prsi is actually paid.
This won't change after January 2024.
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Just to complicate things, if someone chooses to have their occupational pension paid via an ARF, it's Class S.
 
Dave Vanian said:
Just to complicate things, if someone chooses to have their occupational pension paid via an ARF, it's Class S.
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Yes. Anybody with an ARF who defers will continue to be liable for Prsi beyond age 66.
This would be an advantage to a person with less than 2080 paid contributions who doesn't want to continue working after age 66. Maybe a person with a large ARF and an occupational pension at class M.
 
I was looking at the ratios and I think delayed drawdown is a really bad deal on its own terms.

It’s about 5% extra for year so in pure cash terms you’d need to live for 20 years to break even. Male life expectancy is 18 at age 66 and female life expectancy is 21 so the average man will not claw it back. Money has a time value of course and as well as that money is more likely to be useful to you when you’re younger and healthier.

The only real reason to do so is if you expect a big drop in employment income and would pay tax at 20% rather than 40% by delaying pension drawdown but this is offset somewhat by having to pay PRSI if you delay drawdown and are still in employment.

Overall the chosen actuarial adjustments tend to hugely favour the state over the pensioner.

I’ll be interested to see what the take-up is. I’ll predict not more than 5% after a few years.
 
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Life expectancy at age 66 is almost 19years for men and 22 for women. And these numbers are rising. So the % increase for deferring is not that much out of line (though not generous).
 
Billybob said:
Slightly off topic question.
If you’re under 66 and in receipt of an occupational pension, will you be liable for PRSI on it from January ?
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I turned 65 last October and I am no longer paying PRSI on my occupational pension. My contributory pension is due next year. Full contributions paid. By deferring my pension of €14404 for a year to get an additional €13 a week. It would take 21 years to recover.
 
I tried to extract some information out of them several times over the last 10 years.
They won't deal with you when it comes to pensions. You don't get a hypothetical answer either when you present them a hypothetical case. Every effort from me over the last decades or so was fruitless.
It will be all decided when your pension application is on their desk- and ONLY at that time!
I posted my pension application to Sligo last week....now they cannot refuse an answer anymore. Time is up!
 

I was a volunteer with my local Citizens Information Service for a number of years before Covid struck and while it was always understood that the Government was going legislate to increase the pension age and change the methodology for calculating pensions, we were firmly instructed not to draw up pensions forecasts for anyone, due to to uncertainty about what would happen, when it would happen and whether it would happen.

The concern was that we might give people pensions forecasts that would turn out to be wrong, and the reputation and credibility of the Citizens Information Service would have suffered as a result.

So I can fully understand the reluctance of the relevant Government Department to provide pensions forecasts for the same reason. It certainly isn't beyond the realms of possibility that someone might have taken a court case - or gone to the Ombudsman - on the basis of a pension forecast supplied by Social Welfare that turned out to be incorrect.
 
Marsupial said:
So I can fully understand the reluctance of the relevant Government Department to provide pensions forecasts for the same reason.
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I think it’s a quite frankly ridiculous that the state cannot give contributors a best estimate of what their contributions will amount to.

For sure lots of caveats should be given but the state should do a hell of a lot better than it does today.
 

Even if they issued 1,000,000,000 disclaimers and caveats, you can bet your bottom euro that some smart lawyer would still manage to convince an Irish judge that their client had been misled by the State and should be compensated. So why take the risk?
 
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