State Pension (Contributory)

The Contributory State Pension (CSP) is paid to people from the age of 66 who have a sufficient amount of PRSI contributions. If you retire early, it is important to continue paying PRSI contributions to qualify for the State Pension or apply for and obtain credited contributions.

If you have applied for the CSP after the 1^st September 2012 and don’t qualify for the maximum rate of pension because of gaps in your employment and PRSI records, you may be assessed under a new Total Contributions Approach utilising the HomeCaring Periods Scheme which could potentially help you obtain a higher pension rate.

The Total Contributions Approach takes into account the total number of PRSI contributions you have paid, instead of the period in which you paid them. It incorporates the HomeCaring Periods Scheme which benefits those who spent time outside the workplace, raising a family or in a caring role.

Qualifying for a State Pension (Contributory)

You must be aged 66 years or over and have enough Class A, E, F, G, H, N or S PRSI contributions. More specifically the requirements are as follows;

• You must have started to pay PRSI contributions before the age of 56
  • Your entry into insurance is the date when you first started to pay PRSI contributions. However, in the case of public servants who have mixed PRSI payments, the date of entry into insurance can be the date you first started to pay full-rate contributions if this occurred after 6^th April 1991 and you were younger than 56. OR. If you started paying full-rate contributions after 6^th April 1991, the date of entry into insurance can be the date you started paying any social insurance. Whichever option is to your advantage.
  • If you are self-employed and started paying PRSI contributions on 6^th April 1988 and had also been paying employee PRSI at any time, then your date of entry into insurance can either be 6^th April 1988 or the date in which you first started paying employee PRSI. Whichever option is to your advantage. If you started paying self-employed PRSI after 6^th April 1988, your date of entry into insurance will be the date your first full-rate PRSI contribution was made.
• You must have a certain number of paid contributions:
  • If you reach retirement age on or after 6^th April 2012, you need 520 full-rate PRSI contributions (10 years’ worth). 260 out of 520 max can be voluntary
  • If you reached retirement age between 6^th April 2002 and 5^th April 2012, you needed 260 full-rate contributions (5 years’ worth)
  • If you reached retirement age before 6^th April 2002, you needed 156 full-rate contributions (3 years’ worth)
• You must have a sufficient yearly average or total number of contributions (calculated through the normal average rule or alternative average rule):
  • Normal Average Rule: Must have a yearly average of at least 10 qualifying contributions (paid or credited), from the year you first started paying PRSI to the end of the tax year preceding your retirement age. Average 10 contributions p/a required to obtain minimum pension. Average 48 contributions p/a required to obtain maximum pension. Yearly average is rounded up or down.
  • Alternative Average Rule: Must have an average of 48 Class A, E, F, G, H, N or S contributions (paid or credited) for each contribution year. Rule applicable from 1979-1980 tax year to the end of the tax year preceding your retirement age.
  • DSP will calculate using both ways and use method which grants you the higher pension
  • If you qualify for the Homemakers’ Scheme then you may be entitled to a maximum of 20 years to be disregarded when calculating your yearly average. The Scheme applies to those who spent time caring for a child under 12 or an ill person or a child over the age of 12 with a disability
  • If you reach pension age on or after 1^st September 2012, you can be assessed using either the average rules outlined above OR the new Total Contributions Approach (TCA)
    • The TCA calculates the total no of full-rate PRSI contributions and allows for the HomeCaring Periods Scheme to include up to 20 years spent homemaking or as a carer
    • To obtain the maximum pension, you require a total of at least 2080 PRSI contributions (equivalent to 40 years’ employment)
    • Note that your combined HomeCaring Periods and credited contributions cannot total more than 1040 (20 years)

Pro-rata pensions for mixed insurance

You may get a pro-rata pension if you have a mixed insurance record i.e you were employed in both the private and public sector have thus paid different classes of PRSI contributions (full and modified rates)

If you reach pension age on or after 6^th April 2012 with a mixed insurance record you must fulfil all these conditions in order to be eligible for a pension:

• You have a minimum of 520 PRSI contributions (full and modified rate), but at least 260 of those must be full-rate since the date of entry into insurance
• From the date of entry into insurance to the end of the tax year preceding your 66^th birthday, you have a yearly average of 10 PRSI contributions (both full rate and modified rate) (N/A if TCA method for calculation is used)
• You do not qualify for a pension with other countries or you only qualify for a pension that would grant you a lower rate of benefits that this one.

If all of the above conditions are met, you may qualify for a pension. However, keep in mind that it would be proportionate to the amount of PRSI contributions you paid at the full-rate. For example, if you worked 40 years and 10 of those years were in the private sector, you would only be entitled to 25% (a quarter) of the full rate of pension.

Weekly rate of State Pension (Contributory):