Pension ABC

Your employer will register you once you have started your new job. The law makes your employer responsible for PRSI

Your employer deducts your PRSI contribution directly from your wages. The PRSI contribution deducted should be noted on your pay slip.

Your employer also pays PRSI contributions for you. This contribution is not deducted from your pay.

If your employer does not make the correct PRSI contribution, your employer will be held responsible for the cost of the entire contribution and any arrears that may be due. Failure to meet this responsibility can mean that PRSI which has not been paid can be recovered in court as a debt to the State.

The contribution you pay depends on your earnings and occupation and therefore it is called a Pay Related Social Insurance (PRSI) contribution. Some people who have unearned income are also liable for PRSI. There are currently 11 different PRSI classes. They are A, B, C, D, E, H, J, K, M, S and P. The social insurance payments to which you may become entitled depend on the PRSI class you are in.

For more information about the classes you are in, please check the following link:
http://www.welfare.ie/en/Pages/PRSI---Pay-Related-Social-Insurance---Contributions-and-Clas.aspx

Rates

The amount of PRSI you and your employer pay will depend on your earnings and the social insurance class you are insured under.

If you are earning €352 or less per week (before tax is deducted), you will not pay any social insurance. This does not mean that you are not getting a contribution. You are still covered by Class A social insurance. Your employer is paying social insurance on your behalf.

If you earn over €352 per week, you pay 4% PRSI on all your earnings. A new PRSI credit was introduced in 2016 which reduces the amount of PRSI payable for people earning between €352.01 and €424 per week. The credit is tapered and the amount of the credit depends on your earnings. The maximum credit is €12. For example, if you earn €352.01 per week, you will get the maximum PRSI credit of €12. On these earnings of €352.01, your PRSI charge (calculated at 4% of your earnings) would be €14.08. After the €12 credit is deducted, you will pay PRSI of €2.08.

If you earn between €352.01 and €424 per week, the maximum credit of €12 is reduced by one-sixth of the amount of your weekly earnings over €352.01.

You work out how much PRSI you will pay in four steps. First, calculate one-sixth of your earnings over €352.01. Then subtract this from the maximum credit of €12 to get your PRSI credit. Then calculate the basic PRSI charge at 4% of your earnings. Finally, deduct your PRSI credit from the PRSI charge. The result is the amount of PRSI you pay.

For example, for gross weekly earnings of €377:

• One-sixth of your earnings over €352.01 is €377- €352.01 = €24.99, divided by 6 = €4.17.
• Subtract this from the maximum credit of €12, giving you a credit of €7.83.
• The basic PRSI charge is 4% of €377 = €15.08.
• You will pay €7.25 PRSI weekly (€15.08 minus your €7.83 PRSI credit).

No, refunds only occur in the case of over payments.
If the wrong rate of PRSI is deducted from your wages you are entitled to a refund. There are a number of reasons why you might be paying the wrong PRSI rate.

To get a refund either you or your employer should contact the Refunds Section in the Department of Social Protection - see 'Where to apply' below. You will be sent a refund application form to fill out. If you have paid too much PRSI you will get a refund and the Department will correct your social insurance record.

See question "Is there a qualifying period for my statutory retirement pension in Ireland?" below.

Paying social insurance can help you to qualify for social insurance payments, such as the State Pension (Contributory). If you are an employee, Pay Related Social Insurance (PRSI) deductions are made from your earnings each week.

If you are no longer an employee or if you are self-employed and you are no longer making compulsory PRSI contributions, you can opt to make voluntary contributions. If you are getting a social welfare payment or signing for credits you may get credited contributions which will also keep your social insurance record up to date.

Voluntary contributions can help maintain your social insurance record and help you to qualify for social insurance payments in the future. They cover long-term benefits such as pensions. They do not cover short-term benefits for illness, maternity or jobseekers.

You can choose to pay voluntary contributions (if you are under 66 and meet the other conditions) if you:

• Are no longer covered by compulsory PRSI in Ireland
• Are no longer covered by PRSI on a compulsory or voluntary basis in another EU country

If you are working outside the EU and are not subject to Irish or EU social insurance contributions you may also opt to pay voluntary contributions. (See question "What are the conditions for paying voluntary contributions?" below)

If you are taking time off work to care for children under 12 years of age, or a disabled child or adult, the Homemaker’s Scheme may be a better option than making voluntary contributions.

Please note that as of 6 April 2015 some changes to PRSI requirements for voluntary contributions apply: you need 520 paid PRSI contributions (10 years) to be eligible to make voluntary contributions.

Rules

To be eligible to make voluntary contributions you must:

• Have at least 520 PRSI contributions paid under compulsory insurance in either employment or self-employment
• Apply to make your voluntary contribution within 60 months (5 years) of the end of the last completed tax year (contribution year) during which you last paid compulsory insurance or you were last awarded a credited contribution. (From February 2017, the time limit for making voluntary contributions is extended from 12 months to 60 months.)
• Agree to pay voluntary contributions from the start of the contribution week that follows the week in which you leave compulsory insurance

The contribution year is the same as the income tax year so it runs from January to December.

You cannot use contributions paid in Class J to satisfy these conditions. However, you may pay PRSI at Class J and voluntary contributions at the same time. You stop paying voluntary contributions either when you reach 66 years of age or start paying PRSI again.

The rates you can read on the following link: http://www.welfare.ie/en/Pages/Voluntary-Pay-Related-Social-Insurance-PRSI-Contributions.aspx

Introduction

The State Pension (Contributory) is currently paid to people from the age of 66 who have enough Irish social insurance contributions. It is not means-tested. You can have other income and still get a State Pension (Contributory). This pension is taxable but you are unlikely to pay tax if it is your only income.

As the social insurance conditions are very complex you should apply for a State Pension (Contributory) if you have ever worked and have any contributions (stamps) paid at any time. There are a number of pro-rata pensions available to people who paid different types of social insurance contributions or who did not pay contributions because of various reasons (see below). Changes are proposed to the current system in 2020 (see 'Further information' below).

Rules

To qualify for a State Pension (Contributory) you must be aged 66 or over 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

Please note that there have been changes to the State Pension (Pensionable age)
Read more on Question "When can I claim for my State Pension in Ireland?" below or
http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/older_and_retired_people/state_pension_contributory.html

There are different kind of pensions:

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 to the end of the tax year before you reach pension age (66). An average of 10 entitles you to a minimum pension; you need an average of 48 to get the maximum pension. There are also alternative average rules. Please check for more alternative rules the site from the Irish government.
http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/older_and_retired_people/state_pension_contributory.html

Adult dependant
You can get an increase in your payment for an adult dependant (called a qualified adult).

Your income is not taken into account in the assessment for a Increase for a Qualified Adult. Any income your adult dependant has from employment, self-employment, savings, investments and capital (for example, any property except your own home) is taken into account. If you have joint savings or investments with your spouse, civil partner or cohabitant only half is taken into account.

If you are getting a State Pension (Contributory) the Increase for a Qualified Adult is automatically paid directly to your adult dependant. This only applies to applications for State pensions received by the Department on or after 27 September 2007.

Child dependants
You can also get an increase in your payment for child dependants (known as qualified children). Since 6 July 2012 you can no longer claim an Increase for a Qualified Child (IQC) with your State Pension (Contributory) if your spouse, civil partner or cohabitant has an income of over €400 a week. You get a half-rate IQC if your spouse, civil partner or cohabitant earns between €310 and €400 a week. This only applies to claims made after 6 July 2012.

Invalidity Pension
Invalidity Pension is a weekly payment to people who cannot work because of a long-term illness or disability and are covered by social insurance (PRSI). At 66, you transfer automatically to the State Pension (Contributory) at the full rate. Invalidity Pension is taxable. You are entitled to a Free Travel Pass. You may also get extra social welfare benefits, for example

Widow's, Widower's or Surviving Civil Partner's pension
Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension is a weekly payment to the husband, wife or civil partner of a deceased person. This payment was formerly called the Widow's/Widower's (Contributory) Pension. Either you or your deceased spouse or civil partner must have enough social insurance contributions (PRSI).

To qualify you must, of course, be a widow, widower or surviving civil partner and you must not be cohabiting with another person. If you are divorced and you would have been entitled to a Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension had you remained married, you keep your entitlement to the Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension.

If your civil partnership has been dissolved and you would have been entitled to a Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension had you remained in the civil partnership, you keep your entitlement to the Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension.

The pension is payable regardless of other income.

Since 27 December 2013, new applicants for Widow's, Widow(er)'s Contributory Pension and Surviving Civil Partner's Contributory Pension need 260 paid PRSI contributions to qualify (previously 156 contributions were required). You can read Frequently Asked Questions (FAQs) about this pension on welfare.ie.

The Homemakers' Scheme makes it easier for people who stop working for a period to take care of children or adults to qualify for pensions. The scheme was introduced from 6 April 1994 and applies to anyone who provides full-time care for a child under age 12 or an ill or disabled person age 12 or over. It does not apply to time spent caring before the introduction of the scheme. It is most beneficial for people who work outside the home for a number of years and then spend a number of years as carers. It applies equally to women and men.

From 6 April 1994, a contribution year spent as a homemaker may be disregarded in the calculation of the yearly average (see above) up to a maximum of 20 years. This has the effect of increasing your yearly average as the same number of total contributions are divided by a smaller number of years. So, the fact that you do not have any contributions in those years will not reduce your yearly average and will make it easier for you to qualify for a State Pension (Contributory).

Pro-rata 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-rata pension was introduced for them. Only people aged 56 or over on 6 April 1988 (born on or before 6 April 1932) qualify for this pension.

The qualified period is 10 years of social insurance contributions, specifically a minimum of 520 SI contributions. Therefore; you must have started to pay social insurance before the age of 56 (The age limit is higher for people born before 1922).

Pro-rata EU pensions
If you have worked in Ireland and one or more EU states your social insurance contributions from each EU state will be added to your Irish social insurance contributions to help you qualify for a social welfare payment. More information about combining your social insurance contributions to qualify for a state pension is available.

Increases for a qualified adult and pensioners over 80 years of age are calculated in the same way as the personal rate of pension. Increases for a qualified child are payable from one country only and, if from Ireland, are paid in full.

Bilateral social security agreements
Ireland has bilateral social security agreements with Canada, the USA, Australia, New Zealand, Austria, Japan, Republic of Korea 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. See further information below for more information on other pro-rata pensions that no longer apply to many people (because most people who would qualify are now over 66).

You can request a copy of your social insurance record through MyWelfare.ie. To do this, you need your PPS (Personal Public Service) Number. You can get a State Pension (Contributory) form (pdf) from your local post office and your Intro Centre or Social Welfare Branch Office.You should apply 3 months before the age of 66. However, if you have paid social insurance contributions in more than one country, you should apply 6 months before reaching 66.

If you are currently getting a State Pension Contributory and wish to apply for an Increase for a Qualified Adult for your spouse, civil partner or cohabitant you should fill out form SPCQA1(pdf). Note that any increase for a qualified adult that you may qualify for will be paid directly to your spouse, civil partner or cohabitant unless they state that they wish to have it paid to you.

You may qualify for Supplementary Welfare Allowance if there is a delay in processing your claim.

The State Pension (Contributory) is paid to people from the age of 66 who have enough Irish social insurance contributions

The Social Welfare and Pensions Act 2011 made a number of changes to the qualifying age for State pensions. The qualifying age will rise to 67 in 2021 and 68 in 2028. So:

• If you were born on or after 1 January 1955 the minimum qualifying State pension age will be 67.
• If you were born on or after 1 January 1961 the minimum qualifying State pension age will be 68.

Where?
You can request a copy of your social insurance record through MyWelfare.ie. To do this, you need your PPS (Personal Public Service) Number.

You can get a State Pension (Contributory) form (pdf) from your local post office and your Intreo Centre or Social Welfare Branch Office.

When?
You should apply 3 months before the age of 66. However, if you have paid social insurance contributions in more than one country, you should apply 6 months before reaching 66.

From April 2012 late claims for contributory pensions can be backdated for a maximum of 6 months. This applies to State Pension (Contributory and Transition) and Widow's, Widower's or Surviving Civil Partner's (Contributory) Pension. Read more in our document about late claims. See bilateral arrangements question.

Outside the EU?
If you live outside the Republic of Ireland, in an EEA Country, you should apply for EU Pension to the pension institution in your country of residence, in accordance with the procedures of that institution.

If you do not live in an EEA country, you must apply for EU Pension to the pension institution in the EEA country in which you were last insurably employed.

In accordance with the procedures of the pension institution in your country of residence