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

[S class]

DSP are holding online meetings for people approaching age 66.
This is to discuss and improve the new online pension application process.
I will be highlighting the need to assist people to calculate their pension entitlement for different starting dates, in advance of them making their application.

 

[Kev1964]

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?

I take your point but the UK seems to manage the situation reasonably well. Why can’t we do the same?

The TCA and Average rules are pretty straight forward combined with easy access to one’s PRSI record. A reasonably competent computer coder should be able to design a self service portal, also taking into account the transition phase starting in 2025.

I predict that we will move closer to the service provided across the Irish Sea in time. You can already see a recent and significant change in tone in Irish Government advertising when drawing attention to pension rights.

And it is even more critical to provide this insight as to what your pension amount will be as we move away from the current (and more benign) approach of multiple calculations to find the one that will pay the highest pension.

 

[Gordon Gekko]

Does it not depend? If a person is still working at 65/66 and he or she is going to lose almost half of his or her State Pension in tax, it might make sense to defer it for the higher amount when he or she is retired and taxed at lower or negligible rates.

 

[Kev1964]

Does it not depend? If a person is still working at 65/66 and he or she is going to lose almost half of his or her State Pension in tax, it might make sense to defer it for the higher amount when he or she is retired and taxed at lower or negligible rates.

I think there are at least up to three factors in favour of deferring: Potentially reduced income tax as you state above, a higher starting point for the pension and a higher total of PRSI contributions if not already at 2080 at age 66. Individuals need to do their own sums.

Edit: Just thought of a fourth. It could be the difference between qualifying for any payment or none ie must have 520 paid contributions.

 

[Dr Strangelove]

Potentially reduced income tax as you state above, a higher starting point for the pension and a higher total of PRSI contributions if not already at 2080 at age 66.

Average person unlikely to do better by deferring, in particular men.

Only reason really is if on a lower tax bracket in retirement or if short of contributions.

Individuals need to do their own sums.

Agree.

 

[Marsupial]

I disagree.

In fact I think the current situation of no personal forecasts of any kind being provided by the state is more socially harmful as it makes it difficult for individuals to make plans for retirement.

I'm not one of those people who subscribes to the idea that the role of the State is to wipe its citizens' backsides for them.

They provide PRSI records online through MYgovid.ie and they they tell people how to calculate their pensions - in detail - on the Gov.ie website.
The only extra thing that I'd like to see them providing are details of peoples' PECs. Because that is a fixed number that won't change.

 

[Dr Strangelove]

They provide PRSI records online through MYgovid.ie and they they tell people how to calculate their pensions - in detail - on the Gov.ie website.

Even in a highly self-selected forum like AAM many users struggle with these calculations.

Between employer and employee PRSI over my lifetime there will be north of half a million euros paid. It’s not acceptable to get a shrug from officialdom as to what it will get me at the end.

 

[Forumuser]

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?

Ever thought about the possibility that a client might sue the State or CI for NOT supplying them with information to get a reasonable pension in the future? You mentioned the smart lawyer- he could come up with exactly that idea and bring both parties to court for failing to provide adequate information. Such a move would make perfect sense- considering that the State takes our money for a future pension but leaves us in the dark about how to deal with the situation.

 

[S class]

Even in a highly self-selected forum like AAM many users struggle with these calculations.

Absolutely.

I thought I had a reasonably good knowledge about my total Prsi contributions.
I discovered after getting my official figures that I was mistaken regarding change of status credits. I ended up with about 20 extra contributions. This was due to not very precise wording in the guidelines for credited Prsi.
I had assumed that change of status credits only applied to the existing number of class D contributions in my final two calender years of paying class D. It turns out that 2 full years change of status credits are awarded regardless of the number of existing class D on my record.

I have read all the Prsi guidelines several times and it is very hard to correctly interpret them.

 

[Kev1964]

Absolutely.

I thought I had a reasonably good knowledge about my total Prsi contributions.
I discovered after getting my official figures that I was mistaken regarding change of status credits. I ended up with about 20 extra contributions. This was due to not very precise wording in the guidelines for credited Prsi.
I had assumed that change of status credits only applied to the existing number of class D contributions in my final two calender years of paying class D. It turns out that 2 full years change of status credits are awarded regardless of the number of existing class D on my record.

I have read all the Prsi guidelines several times and it is very hard to correctly interpret them.

I suggest you have a chat with a guy on here called S Class - he seems to have been able to answer every PRSI question that I’ve seen!

 

[Lisgoold]

DSP are holding online meetings for people approaching age 66.
This is to discuss and improve the new online pension application process.
I will be highlighting the need to assist people to calculate their pension entitlement for different starting dates, in advance of them making their application.

Do you mean this is already happening, and if so, is it for all people approaching 66?
Or maybe a trial, just involving a small number of people?

 

[S class]

Do you mean this is already happening, and if so, is it for all people approaching 66?
Or maybe a trial, just involving a small number of people?

I got this message as a notification on mywelfare.
If you are interested your could email them.

Can you help us improve the Pensions service ?​

Dear customer,

We are constantly reviewing MyWelfare to make sure it works well for everyone. As part of this we ask for user feedback to help us design new services and improve existing ones to meet the needs of everyone using MyWelfare.

We’re currently looking for people who are approaching pension age (66) in the next few years to provide feedback on an online pensions application that’s being developed. If you’d like to take part in an online feedback session, please email digitalservices@welfare.ie

Any thoughts or suggestions you have to share would also be greatly appreciated.

Regards,
Department of Social Protection.

​

​

​

 

[Lisgoold]

I got this message as a notification on mywelfare.
If you are interested your could email them.

Can you help us improve the Pensions service ?​

Dear customer,

We are constantly reviewing MyWelfare to make sure it works well for everyone. As part of this we ask for user feedback to help us design new services and improve existing ones to meet the needs of everyone using MyWelfare.

We’re currently looking for people who are approaching pension age (66) in the next few years to provide feedback on an online pensions application that’s being developed. If you’d like to take part in an online feedback session, please email digitalservices@welfare.ie

Any thoughts or suggestions you have to share would also be greatly appreciated.

Regards,
Department of Social Protection.

​

​

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I think they'll be snowed under!

 

[Towger]

I have read all the Prsi guidelines several times and it is very hard to correctly interpret them.

Don't worry, the senior management in DSP don't fully understand how PRSI works. They may think they do, but the real world is far more complex.

 

[Dave Vanian]

In the area of private sector pensions, people get an annual Statement of Reasonable Projection (SORP) which is an attempt at projecting what their pension is going to be at retirement. It's riddled with assumptions and caveats but it's better than nothing.

I'd argue that a projection of a person's State Contributory Pension is far simpler to predict as there's no element of future fund growth in the calculations. So I don't see why the State couldn't provide such a projection. Such a projection could come with a big black box at the top saying "This projection is based on the current rules, which may change between now and when you retire. It's not a guarantee of a pension." Or words to that effect.

I think it would be very useful for people and should be issued by the DSP on an annual basis from the age of, say 56, onwards.

 

[Marsupial]

Ever thought about the possibility that a client might sue the State or CI for NOT supplying them with information to get a reasonable pension in the future? You mentioned the smart lawyer- he could come up with exactly that idea and bring both parties to court for failing to provide adequate information. Such a move would make perfect sense- considering that the State takes our money for a future pension but leaves us in the dark about how to deal with the situation.

That wouldn't be a smart lawyer, that would be an extremely dumb lawyer!

 

[Forumuser]

That wouldn't be a smart lawyer, that would be an extremely dumb lawyer!

Explain, please!

 

[Marsupial]

Explain, please!

I will after you have linked me to the legislation that states that a citizen is entitled to receive a pension forecast from the Department of Social Protection or indeed, while you're at it, from the Citizens Information Board!

 

[Forumuser]

I will after you have linked me to the legislation that states that a citizen is entitled to receive a pension forecast from the Department of Social Protection or indeed, while you're at it, from the Citizens Information Board!

LOL!
I never looked for a pension forecast from any of those two. This is not the problem. I looked for clarification about certain pension rules and regulations. Many times I got no answer- just the standard " It will be all decided when you hand in your application". That is no way to treat people. I had a good few questions over the years. I went to CI first- but very often they did not know the answer. They told me to get in contact with SW and the pension section. Same game there- "I cannot answer that question". This is ridiculous.
Every week I pay my PRSI dues- for may years. But I am not helped in any way when it comes to planning in the matter.
It is precisely this lack of support and this hiding which could give a clever solicitor enough ammunition to sue SW for failing to support the very people it is supposed to work for.

 

[Dr Strangelove]

They told me to get in contact with SW and the pension section. Same game there- "I cannot answer that question". This is ridiculous.

The attitude is ridiculous given how imprecise the guidelines are often written.

I had a technical query regarding PRSI rules years ago that DSP would not answer.

The only way to get an answer was to get a TD to ask a parliamentary question.