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Qualified Pay Related Social Insurance (PRSI) contributors are entitled to a contributory retirement pension (if they have retired by age 65) or an old age pension (payable from age 66). A surviving spouse's pension is payable if a qualified contributor dies, either before or after retirement. Pensions consist of a personal entitlement and dependants' allowances (allowances for adult dependants are means tested).

Means tested non-contributory pensions are not relevant to most people working in pensionable employment.

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The following is from the Oasis Service:

The Old Age Contributory Pension is payable to people in Ireland from the age of 66 who have enough social insurance contributions. It is not means tested and you may have income from any other source while receiving it. It is taxable.

There are a number of Pro-Rata Old Age Contributory pensions. These were introduced to deal with a number of problems and anomalies that arose as a result of people paying different types of social insurance contributions or not paying contributions for various reasons.

As the social insurance conditions are very complex, you should apply if you have any contributions paid at any time.

If you retire early, you should ensure that you continue to pay PRSI contributions or get credits. You should apply for this pension four months before reaching the age of 66. If you paid contributions in other countries, you should apply six months before.

The Social Welfare Law Reform and Pensions Act 2006 (pdf) allows for the name Old Age Contributory Pension to change to State Pension (Contributory). The new name came into effect on 29 September, 2006.

Rules

In order to qualify for this pension you must be aged 66 and have enough Class A, E, F,G, H, N or S social insurance contributions.

You need to:

• have paid social insurance contributions before a certain age
• have a certain number of social insurance contributions paid and
• have a certain average number over the years since you first started to pay.

Paid insurance before a certain age

You must have entered social insurance before a certain age. For people currently under 66, they must have started to pay social insurance before the age of 56. The age limit is higher for people born before 1922.

Entry into insurance

The entry into insurance means the date on which you first started to pay social insurance.

The rules that determine when entry to insurance occurred are quite complex for those with mixed insurance, i.e., full social insurance for some of the time and modified at other times. If you first started to pay full insurance before April 1st 1991, your entry into insurance is regarded as the date on which you first started to pay the full rate of insurance if that would be to your advantage. If you started to pay full insurance after April 1st 1991, your entry into insurance is the time you first paid any social insurance.

There are also special entry into insurance rules for self-employed people. If you started to pay self-employed contributions on April 6th 1988 and had previously paid employee insurance at any time, then the date of entry into insurance can be either April 6th 1988 or the date on which you actually first paid insurance, whichever is to your advantage.

Number of paid contributions

If you reach pension age before April 6th 2002, you must have 156 qualifying paid contributions (a total of 3 years but they do not have to be consecutive). This means that you must have actually paid full rate contributions (i.e., full stamp prior to 1979 and Class A,E,F,G,H,N and S since then.)

If you reach pension age on or after 6th April 2002, you will need to have 260 paid contributions (effectively 5 years contributions but they need not be consecutive). However, if you were a voluntary contributor on or before April 6th 1997, you need only have 156 paid contributions if you have an average of at least 20 contributions per year.

If you reach pension age on or after April 6th 2012, you will need to have 520 paid contributions (10 years paid contributions). In this case, not more than 260 of the 520 contributions may be voluntary contributions. However, if you were a voluntary contributor on or before April 6th 1997 and you have an average of 10 contributions per year, you may meet the requirement if you have a total of 520 contributions, but only 156 need to be compulsory paid contributions.

Pre-1953 contributions

In some cases, contributions paid before 1953 into the then National Insurance scheme may be taken into account in order to satisfy the requirement that you have 156 paid contributions. In fact, each 2 such contributions are counted as 3. But, if they are taken into account, the average must be measured from 1953. There is a special pro-rate pension for people with pre-1953 contributions.

Average contributions per year

You must meet the average condition. This is probably the most complex aspect of qualifying for pensions and it is the one that gives rise to the greatest problems and anomalies.

Normal average rule

The normal average rule states that you must have a yearly average of at least 10 appropriate contributions paid or credited from the year you first entered insurance or from 1953, whichever is later. An average of 10 entitles you to a minimum pension; you need an average of 48 to get the full pension.

"Alternative" Average Rule

This alternative average only applies to people who reach pension age on or after April 6th 1992.

It requires that you have an average of 48 Class A, E, F, G, H, N or S contributions (paid or credited ) per contribution year from April 1979 to the April before your 66th birthday. This average would entitle you to a full pension. There is no provision for a reduced pension when this alternative average is used.

So, if you reach the age of 66 on or after April 6th 1992, your average will be looked at in two ways - the usual average will be assessed and the alternative average will be assessed. Most employed or formerly employed people will be able to meet the alternative average. The alternative average will probably be looked at first because it is easier to assess. If you do not have an average of 48 from 1979 then the usual method of assessing the average will be looked at and you may get a reduced pension (if you do not meet the alternative average, it is virtually impossible for you to have an average of 48 on the usual method).

Pro-rata pensions

There are a number of pro-rata pensions, which were introduced because of problems and anomalies that arose because of the operation of the average rule and because of the exclusion of some people from the social insurance system at particular times.

Pro-rata pension for intermittent insurance

The first group for whom pro-rata pensions were arranged were those who had been in and out of insurance because of the operation of the income limit on contributions. Prior to 1974, non-manual workers were obliged to pay social insurance contributions only if their income was below a certain level. From April 1974, there has been no income limit. Many of the people who paid social insurance for a period, ceased to pay for a while and then came back into the insurance system in April 1974 because of the abolition of the income limit would not meet the usual average requirement. In 1988, arrangements were made for them to qualify for a pro-rata pension.

Their average is measured in the usual way and, if that average is 10 or more, they get a pension in the usual way. However, if it is between 5 and 9, they may get a pro-rata pension.

This pro-rata pension is payable to people who have a broken insurance record and re-entered insurance in 1974 because of the removal of the income limit. If you re-entered insurance in that year for any other reason (e.g., because you had previously been self-employed or out of the country), you do not meet these specific terms and you would not be eligible for this pro-rata pension.

If you qualify for this pro-rata pension, you may also get the qualified adult allowance and full child dependent allowance. The qualified adult allowance is proportional.

Pro-rata pension for mixed insurance

The second group for whom pro-rata pensions were introduced are those with mixed insurance records, i.e., people who worked for some time in the public sector and for a time in the private sector. The rules governing these pro-rata pensions are different from those described above.

Mixed insurance arises when a person spends part of his/her working life in the public service paying modified insurance and part in the private sector paying Class A (or, since April 1988, self-employed and paying Class S).

There are many people who have had a career in both the public and private sector but do not have mixed insurance. This is because no insurance was payable by people whose incomes were above certain limits before 1974. Certain groups who are now insured were outside the scope of the system - Gardai started to pay insurance in 1973; certain members of religious orders started to pay insurance in 1987 and doctors and dentists in the civil service started to pay insurance in 1989.

People with mixed insurance may have enough full contributions to enable them to qualify for a contributory old age pension. This depends on the exact circumstances of each case. It could happen that one person would qualify while another, who might have more contributions, would not qualify.

Since 1991, a contributory old age pension may be payable on a pro-rata basis to people with mixed insurance.

You must have:

• at least 260 paid or credited contributions at the full rate since entry into insurance or 1953, whichever is later, or at least 208 full contributions paid in that time
• a mixture of full and modified contributions, which when added together give you a yearly average of 10 from the time you first entered insurance or 1953, whichever is later, to the end of the contribution year before your 66th birthday.
• failed to qualify for a pension under EU regulations or under reciprocal arrangements with other countries or only qualified for a pension at a lower rate than this pro-rata pension would give you.

If you meet all these requirements, you may qualify for a pension proportionate to the number of contributions that you have at the full rate. To take a very simple example, if you worked for 40 years up to age 66 and 10 of those were in the private sector, you would get one-quarter of the normal pension.

If you reach pension age on or after April 6th 2012, you will need to have a total of at least 520 full and mixed contributions paid and at least 260 of these must be full contributions.

The way in which the amount is calculated is similar to the way in which entitlement to a pension from two or more member states is calculated under EU Regulations.

What happens to people with mixed insurance is that all contributions at the full and modified rates are added together. The average is then measured in the normal way. If you have an average of at least 10 then you may qualify. Then the number of full contributions is divided by the total number of contributions to find out what proportion are full rate; you then get that proportion of the pension.

The qualified adult allowance payable with this pension is proportioned as well.

Pro-rate pension for self-employed people

The self-employed have been obliged to pay social insurance since 1988. Prior to that, some self-employed people were voluntarily paying insurance.

Some self-employed people were already over the minimum age when they first started to pay contributions in 1988. In April 1999, a special pro-rate pension was introduced for them.

You may qualify for this pro-rate pension if:

• you were aged 56 or over on April 6th 1988 (born on or before April 6th 1932)
• you first started paying social insurance contributions as a self-employed person on or after April 6th 1988
• you have a minimum of 260 full-rate social insurance contributions paid on a compulsory basis since April 6th 1988, provided that the first contributions (since this date) are self-employment (Class S) contributions.

If you meet these conditions, you may get a pro-rate pension of half the normal maximum rate. The qualified adult and child dependent allowances are also at half rate. The over-80 allowance is paid in full.

Pro-rata pensions for people with pre-1953 contributions

This pro-rate pension was introduced in May 2000. You may qualify if you have at least 260 full contributions, some of which must have been paid before 1953. Every 2 contributions paid before 1953 count as 3.

If you meet these conditions, you may get a pro-rate pension of half the normal maximum rate. The qualified adult and child dependent allowances are also at half rate. The over-80 allowance is paid in full.

Working in the Home and Old Age Pensions

In 1994, regulations were made that should make it easier for people who take some time off work to care for family members to qualify for pensions. These regulations were improved in 1996. The scheme applies to people who have been carers since 1994 and/or subsequently. It does not affect those who were carers before April 1994 and it will not be of much use to those who give up work permanently. It is of greatest importance for those who work outside the home for a number of years, then spend a number of years as carers and then return to the workforce. It will not affect most people for a long time as the principal beneficiaries are likely to be people who are now in their 20s or 30s. It applies equally to women and men.

These regulations provide that homemakers may have up to 20 of their homemaking years disregarded when their entitlement to a pension is being assessed.

A homemaker is defined as a person who lives with and cares for a child under the age of 12 or lives with and provides full-time care and attention for an incapacitated person. The definition of an incapacitated person is the same as that which applies to the Carer's Allowance. A homemaker must live in the country and should not earn more than 38.09 euro a week from any employment.

From April 5th 1994, any contribution year spent as a homemaker may be disregarded in the calculation of the yearly average up to a maximum of 20 years. So, the fact that you do not have any contributions in those years will not affect your entitlement.

EU pensions

There is no such thing as an EU pension as such but people who have worked in more than one member state of the EU may qualify for a pension from each country because of EU rules.

If you have paid social insurance contributions in 2 or more member states, you should apply for a pension to the member state in which you now live or in which you had your last contribution if you have no contributions in the state where you live. The authorities in the state in which you apply will then calculate with the other states exactly what is due to you from each of them.

Each state looks at your situation in two ways and then grants you whichever is most beneficial.

(a) They see if you can qualify for a pension on the basis of contributions paid in that state only

(b) They then look at your contributions in all member states and see what pension you would get if all of those contributions had been in their own state; they then calculate what proportion is applicable to them

You then get the higher of (a) and (b)

For example, a man who has worked 20 years in the UK and the last 16 years in Ireland is now approaching 66 and is looking for a contributory old age pension. His last 16 years in Ireland entitle him to a full contributory old age pension from Ireland so there is no need to take his UK contributions into account for that.

His UK contributions entitle him to some UK pension but not the full pension. The UK authorities calculate what the UK contributions on their own will give him. Then they do the alternative calculation - they combine the contributions paid in the two states, i.e., 36 years in total; calculate what that would give him if they were all paid in the UK and then calculate the proportion payable by the UK, i.e., 20/36 of that. The UK authorities then pay him the higher of the two calculations.

These rules apply in the same way to old age and retirement pensions.

Qualified adult allowances and over-80 allowances are calculated in the same way as the personal rate of pension. Child dependent allowances are payable from one country only and, if from Ireland, are paid in full.

European Economic Area countries

Since January 1st 1994, when the European Economic Area agreement came into effect, the same rules apply to Iceland, Norway and Liechtenstein.

Bilateral social security agreements

Ireland has entered into bilateral social security agreements with Canada, the USA, Australia, New Zealand, Switzerland, Austria and Quebec (which has a separate system from the rest of Canada). These agreements are broadly similar and they generally provide that social insurance paid in Ireland and the other country can be combined to help people qualify for old age and retirement pensions. Again, in general, the method of calculation is similar to the EU rules.

The Department of Social and Family Affairs published "Working it out - A Guide to the Old Age Contributory Pension",it will help you to work out if you qualify for an Old Age Contributory Pension.

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