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August 11, 2023

Irish State Pension (Contributory) Guide + 2024-25 Changes

Ireland’s State Pension (Contributory) provides financial support to employees aged 66 and above in retirement. Learn how to apply, weekly rates, and 2024-25 updates.

Aine Kavanagh

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Aine Kavanagh

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The State Pension (Contributory), previously known as the Old Age (Contributory) Pension, is a government pension that offers financial support and assistance to Irish workers in retirement. 

It’s a weekly payment made to individuals aged 66 and above and depends on your Pay Related Social Insurance (PRSI) contributions record.  

We’ll cover the State Pension (Contributory) in detail and introduce you to its upcoming changes in 2024 and 2025.

Further Reading

What Is the State Pension (Contributory) in Ireland?

The State Pension (Contributory) is a social insurance payment made to people aged 66 and above based on their social insurance record. As of November 2023, the State Pension (Contributory) is paid at a maximum rate of €265.30. 

To receive this pension, you must have enough Class A, E, F, G, H, N, or S social insurance contributions (full-rate PRSI contributions).

Learn about these PRSI classes and their contribution rates

State Pension (Contributory) vs. State Pension (Non-Contributory)

Unlike the PRSI-dependent State Pension (Contributory), the Non-Contributory State Pension is a means-tested payment. 

It’s paid to people aged 66 and above who don’t qualify for the contributory pension due to insufficient PRSI contributions. 

Check out our detailed Irish State Pension (Non-Contributory) guide for more information. 

Before we delve into the eligibility and coverage of the State Pension, let's take a quick look at the changes the government plans to introduce in 2024-25.

Upcoming Changes to the State Pension (Contributory) in 2024 & 2025

In January 2024 and 2025, the Irish government will introduce several changes to the State Pension (Contributory).

Here’s a quick overview of these changes (we’ll cover them in detail later in this article): 

  • From January 2024:

    • The maximum weekly rate of State Pension (Contributory) will increase by €12, with a proportional increase for qualified adult and child dependents as announced by the Irish government in ‘Budget 2024’. 

    • The accessibility to State Pension (Contributory) will improve for long-term carers who have provided full-time care to a disabled or incapacitated person for over 20 years (1040 weeks).

    • The pension system will become more flexible by allowing citizens to claim the State Pension (Contributory) anytime between the ages of 66 and 70 years.

  

  • From January 2025:

    • The government will start a 10-year phased removal of the Yearly Average Method and replace it with the new Total Contributions Approach (TCA). This will help make the pension contribution calculations fairer.

Further Reading

Who Can Qualify for the State Pension (Contributory) in Ireland?

Let’s look at the eligibility criteria for employed and self-employed people:

A. Eligibility Criteria for Employees 

To qualify for the State Pension (Contributory), you must fulfil each of the following conditions: 

1. Paid PRSI Contributions Before a Specific Age

You must have started paying your PRSI contributions before you turned 56. The day you start paying your PRSI is known as your entry into insurance.

If you have mixed-rate contributions (which means you've paid PRSI contributions as an employee and as a public/civil servant), the following rules apply: 

  • If your first date of PRSI payment (entry into insurance) was before you turned 56 and before 6th April 1991, your official entry into insurance is the date that gives you a larger pension payment. 

  • If you started paying full-rate PRSI contributions after 6th April 1991, your entry into insurance is the date of your first full-rate contribution.

2. Amount of PRSI Contributions

The number of full-rate PRSI contributions you require depends on the date you reached pension age (66):

  • 6th April 2012 and after - 520 contributions (10 years)

  • Between 6th April 2002 and 5th April 2012 - 260 contributions (5 years)

  • 5th April 2002 and earlier- 156 contributions (3 years)

Those who reached pension age after 6th April 2012 can have a maximum of 260 voluntary contributions.

Voluntary contributions allow you to maintain your insurance coverage if you are no longer covered by the compulsory PRSI (Pay-Related Social Insurance) system. These contributions are not compulsory, and you have the freedom to decide whether or not to make them. You can pay voluntary contributions if you are under 66 and no longer covered by compulsory PRSI in Ireland or any other European Union (EU) country.

3. Total Contributions or Yearly Average

This is one of the trickiest parts of the Contributory State Pension, so hold tight.

A yearly average number of contributions is calculated for everyone who reached pension age before 1st September 2012

This average is either calculated under the normal average rule or the alternative average rule.

Let’s understand them better: 

  • Normal average - A minimum of 10 average contributions per year to receive the minimum amount and 48 to receive the maximum amount.

  • Alternative average - An average of 48 contributions per year to receive the maximum pension amount (no minimum amount).

If you reach the pension age after 1st September 2012, the DSP calculates your maximum pension rate using the above rules or the Total Contributions Approach (TCA).

What is the Total Contributions Approach?

The TCA method doesn't use yearly averages to calculate your pension. Instead, it looks at the total contributions you’ve paid before turning 66 to decide your pension rate.

In TCA, you need a minimum of 2080 contributions (40 years) to receive the State Pension (Contributory) at the maximum rate of €265.30 (as of November 2023).

Seems complicated?

Don’t worry!

From January 2025, the Irish government will change the method of calculating pensions to make things fairer for everyone.

The old Yearly Average Method will gradually fade away over 10 years. So, by 2034, pensions will only be calculated using the Total Contributions Approach (TCA).

During this 10-year transition period, your pension will be calculated using a:

  • Combination of Yearly Average Method and TCA: 

    • Initially, 90% of your pension will be calculated using the Yearly Average Method and 10% using the new TCA method. 

  • Each year, the proportion considered from the Yearly Average Method will be reduced by 10%. So, in the second year, it will be 80% from the Yearly Average Method and 20% from the TCA method, and so on, until all of your pension is calculated based on the TCA method.

After the transition period, your pension will be calculated using: 

  • Full TCA Approach: Your pension will be calculated based entirely on the Total Contributions Approach and will consider all the money you've contributed over the years.

B. Eligibility Criteria for Self-Employed  

To qualify for the State Pension (Contributory), self-employed people must have full-rate contributions paid at Class S. 

While most of the conditions we've mentioned for employees also apply to self-employed people, the entry into insurance rules applies differently for self-employed individuals. 

Ireland’s Department of Social Protection started social insurance PRSI contributions for self-employed people on 6th April 1988.

To assess eligibility for the Contributory State Pension, the DSP will check if the self-employed individual has:

  • Contributions Paid On or Before 6th April 1988: For self-employed people who started paying their PRSI contributions before 6th April 1988, the DSP will assess your State Pension eligibility based on your contribution record from that date. They do this if it gives you a better entitlement while calculating your benefits. 

  • Contributions Paid After 6th April 1988: If you’re self-employed and began paying Class S PRSI contributions after this date, the DSP determines your entitlement based on the date of your first contribution (the date of entering insurable employment).

Further Reading

What Are the State Pension (Contributory) Payment Rates in Ireland?

As of November 2023, the maximum weekly personal rate of State Pension depends on your age:

  • If you're aged 66 to 79, the rate is €265.30, and

  • If you’re aged 80 and above, the personal rate is €275.30.

But hold on… there's good news!

On 10th October 2023, the Irish government announced the Budget 2024, which declared that those receiving State Pension (Contributory) at the maximum rate will get an increase of €12 per week from January 2024. 

So the maximum rate of State Pension (Contributory) from January 2024 onwards will be: 

  • €277.30 if you’re under 80 years of age. 

  • €287.30 if you’re aged 80 and above.

There will also be a proportionate increase in the rate of payment if you’re receiving an increase for qualified adult and child dependents. 

A. Increase for a Qualified Adult (IQA)

Adult-dependent increases usually cover your spouse, civil partner, or cohabitant. 

IQA is a means-tested payment that considers any income the adult dependent gets from employment/self-employment, savings, or investments. 

The DSP will consider only half of the income for those with joint savings accounts with adult dependents while checking IQA eligibility. 

If you have made 48 or more yearly average contributions, you can be eligible for an increase for adult dependents, but the payment rate will depend on the dependent's age. 

As of November 2023:

  • If your adult dependent is under 66, you get an increase at a maximum rate of €176.70.

  • If your adult dependent is over 66, you get an increase at a maximum rate of €237.80.

From January 2024 onwards:

  • For adult dependents under 66, you get an increase at a maximum rate of €184.70.

  • For adult dependents over 66, you get an increase at a maximum rate of €248.60.

B. Increase for a Qualified Child (IQC)

You can get an increase for a qualified child dependent if you have a child under 18 who lives with you. 

If your child is 18 or older, you'll receive IQC for three months after they finish high school or the Leaving Certificate exam, provided they aren’t getting other social welfare payments. 

What’s more?

Even if your child starts working right after finishing school, you can continue to receive the IQC payments until they’re 22. 

As of November 2023:

  • If the child dependent is under 12 years, you can get an increase of €42 (full rate) 

  • If the child dependent is above 12 years, you can get an increase of €50 (full rate) 

Plus, you'll also receive a special once-off payment of €100 (one payment per qualified child) in the week starting November 27, 2023.

And that’s not all!

Starting January 2024, the government will increase the IQC weekly payment by €4. 

So, from January 2024 onwards, the weekly rates of IQC payments will be:

  • €46 (full rate) for children under 12 years of age and 

  • €54 (full rate) for children aged 12 and above 

Remember: 

An increase for qualified child dependents (IQC) is also a means-tested payment.  

You may not be eligible for a qualified child increase if your partner earns over €400 per week. 

On the other hand, if your partners earn between €310 and €400 per week, you’re eligible to get the child benefit at a reduced rate, but this only applies to claims made after 6th July 2012.

You may also be eligible for other benefits and allowances like a living-alone increase, a household benefits package, or a fuel allowance.

How to Apply for Ireland’s State Pension (Contributory)?

If you’re living and working in Ireland, you should apply for the State Pension (Contributory) 3 months before you turn 66.

However, if you have worked outside Ireland — in one or more EU states or countries having bilateral relations with Ireland — you must apply 6 months before reaching the State Pension age (66). 

To apply for the State Pension (Contributory), you must collect your contribution statement from mywelfare.ie using your Personal Public Service number and complete the SPC1 application form.

Download the State Pension (Contributory) (SPC1) application form.

You can collect the SPC1 form from the nearest post office, Intreo Centre, or Social Welfare Branch Office.

To apply for an adult-dependent increase, you must complete the increase for qualified adults (SPCQA1) application form. 

Download the application form for Increase for Qualified Adult (SPCQA1).

Where to Apply for the State Pension (Contributory) in Ireland?

All State Pension (Contributory) applications must be submitted via post, as the DSP doesn’t accept online applications. 

Post your completed application form to the following address:

Department of Social Protection

College Road

Sligo

F91 T384.

In case of any queries, contact the DSP at:

Tel: (071) 915 7100 or 0818 200 400

Email: [email protected]

Can Employees Claim the State Pension (Contributory) if They Have Worked Outside Ireland?

If you have worked in Ireland or one or more EU states, you can combine your social insurance contributions made in each EU member state with your Irish contributions. 

Ireland has also signed bilateral social security agreements with many countries, which allow Irish employees working in countries other than the EU to join the State Pension scheme. 

Learn more about Claiming the State Pension While Living or Working Abroad

8 FAQs About Ireland’s State Pension (Contributory)

Here are some commonly asked questions about the Contributory State Pension:

1. Is the State Pension (Contributory) Taxed?

In Ireland, all pension income, including State, occupational, and private pensions under the PAYE (Pay As You Earn) system, is subject to taxation. 

If you receive an occupational pension and the State Pension, you may be required to pay taxes on both.

2. Can Long-Term Carers Avail the State Pension (Contributory)?

As of November 2023, no provisions allow long-term carers to avail the benefits of the State Pension (Contributory). 

However, from January 2024, the government will introduce a new 'long-term carers contribution scheme' to improve access to the State Pension (Contributory) for long-term carers.

If you have spent 20 years (1040 weeks) or more caring for an ill or disabled person who requires full-time care, you may receive the contributory pension at an enhanced rate.

You will get long-term carer’s contributions on your PRSI record for each week you provided full-time care to an ill or disabled person.

To qualify for a long-term carer contribution, you must:

  • Have been permanently residing in Ireland for the period you provided care. 

  • Be residing with the person to whom you’re offering full-time care (in some cases, you might qualify even if you didn't live with the person but still provided full-time care.) 

  • Have been 16 years or above but under the pension age when you started providing care. 

  • Not receive any social welfare payments, except for Carer’s allowance, Carer's Benefit, Domiciliary Care Allowance, or Carer's Support Grant.

  • Not be employed, self-employed, or enrolled in educational courses for more than 18.5 hours a week. 

3. Can Widows or Surviving Civil Partners Get the Contributory Pension?

Widows and surviving partners can claim State Pension (Contributory), aka the Surviving Civil Partner’s Contributory Pension. 

The entitlement depends upon the social insurance contributions made by the person eligible for the pension, i.e., the deceased spouse or civil partner. 

This pension is not means-tested and covers the deceased's widows and surviving civil partners, even if they are employed or have other sources of income.

You may be entitled to this pension if you’re not cohabiting with another person and are:

  • Widowed or a surviving civil partner.

  • Divorced from their late spouse and have not remarried.

  • Dissolving their civil partnership with their late civil partner and not entering a new civil partnership or marriage.

4. Is It Possible to Postpone My State Pension (Contributory) and What Benefits Can I Expect?

As of November 2023, the government doesn’t give you the option to defer your State Pension (Contributory).

But from January 2024, the Irish government plans to allow workers to delay or ‘defer’ their State Pension (Contributory) beyond 66 in exchange for higher pension entitlements

When you delay your pension, you can keep paying contributions to increase your payment amount. 

However, it’s important to note that you can't add more contributions beyond the maximum limit of 2080 contributions (40 years).

5. Can Employees Work After Retirement While Receiving the State Pension (Contributory)?

As of 2023, individuals aged 66 and above can work full-time and claim the State Pension (Contributory).

Even if you have retired early, you can re-enter the workforce by getting a new job or starting your own business. 

From January 2024, the new flexible pension age model will allow you to keep working for as long as you want and offer greater flexibility for when you can start claiming your State Pension.

6. How Can I Integrate State Pension (Contributory) Payments into My Overall Retirement Plan?

The State Pension (Contributory) provides a continuous income stream. 

However, the average Irish pension amount won’t be enough to sustain a comfortable lifestyle in retirement — considering inflation, increasing life expectancy, and other factors. 

You should supplement your State Pension with additional savings or pension plans to ensure a more financially secure and worry-free retirement. 

Here are some tips to help you get started:

  • Diversify your investments: Start early and spread your investments across different types, like stocks, bonds, and real estate. This helps manage risk and potentially increase returns.

  • Join employer-sponsored pension plans: Take advantage of the occupational pension plans offered by your employer. These plans often require contributions from you and your employer, boosting your retirement savings.

  • Stay updated with the latest changes in government policies: Be aware of any changes in government policies related to pensions or retirement benefits. This knowledge can help you make informed decisions about your finances and adjust your plans.

7. How Does Ireland's State Pension System Compare to Other European Pensions?

A study by the Mercer CFA Institute in 2023 ranked Ireland’s pension system at 13 out of 47 countries in their Global Pension Index (MCGPI)

The Irish pension system received an overall B grade and ranks ahead of larger European countries like Germany and France.

The index measured the strength of Ireland’s pension system based on three parameters:

  • Sustainability: How long can the system deliver

  • Adequacy: How much do people get

  • Integrity: Trustworthiness of the pension system

As of 2023, Ireland's pension system ranks low at 21 in sustainability but has performed well in adequacy (ranking at 14) and integrity (ranking at 10). 

By introducing reforms to the pension system in 2024 and 2025, the government aims to enhance the system's long-term sustainability.

8. What is the State Pension (Transition)?

The State Pension (Transition), also known as the Retirement Pension until 2007, was a payment made to employees from age 65 till they reached the State Pension age of 66. 

To avail of State Pension (Transition), an employee had to be retired from insurable employment. They were automatically transferred to the State Pension (Contributory) when they reached the qualifying age of 66. 

The Irish government abolished this pension scheme on 1st January 2014. 

Boost Your Employees' State Pension by Offering Extra Benefits with Kota

Offering State Pension (Contributory) to employed and self-employed workers in Ireland was an initiative the Irish government took to ensure citizens are well looked after in retirement. 

As an employer, you can supplement the contributory pension by setting up a solid occupational pension scheme with Kota.

Kota lets you: 

  • Easily set up a workplace pension plan.

  • Enrol your staff in award-winning pension schemes within minutes.

  • Set matching employer and employee contributions.

Moreover, your employees get complete control over their contributions, allowing them to make changes whenever they want. 

So what are you waiting for? Empower your people with Kota’s digital pensions

Aine Kavanagh

Article written by

Aine Kavanagh

👋🏻 Hi I'm Aine, Head of Customer Success at Kota. Whether you're a Kota customer, a Kota user, or you're just browsing, I hope to help educate and empower those who want to know more about owning their own benefits, and building financial autonomy 📚

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