Wednesday 26 October 2016

Do you qualify for the State pension?

It's important to know your entitlements and how to claim them

Published 25/10/2015 | 02:30

Finance Minister Michael Noonan's Budget included a €3 increase in the weekly pension
Finance Minister Michael Noonan's Budget included a €3 increase in the weekly pension

More than half a million pensioners will have an extra €3 a week in their pocket from this January. In his Budget earlier this month, Finance Minister Michael Noonan announced that the State pension and the carer's allowance for those over the age of 66 will increase by €3 a week from January 2016. So an individual aged 66 will get a State contributory pension of up to €233.30 a week. However, you'll only get this pension if you're eligible for it - and not everyone is.

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There are two types of State pension - contributory and non-contributory. You get more money from the contributory pension than the non-contributory one. Furthermore, as the contributory pension is not means-tested, it is probably the easier one to get.

However, you may not qualify for the full contributory pension - particularly if you have spent a lot of time travelling abroad or if you looked after children full-time in the home before 1994.

To be be eligible for the full contributory pension, you must have paid 520 social insurance contributions since you started working. As you typically get one social insurance contribution for each week worked, you typically need to have worked for 10 full years to reach the 520 limit.

On top of this, you must also have built up a yearly average of social insurance contributions. This yearly average is calculated from the date you first started working.

Gaps in your social insurance record could therefore work against you when it comes to the State pension. Today's stay-at-home mums or dads shouldn't get too worried though.

In 1994, the Government introduced a scheme that makes it easier for stay-at-home mums or dads to qualify for a contributory State pension.

The scheme, known as the homemaker's scheme, ignores any years spent looking after children (under the age of 12) in the home when working out your yearly average of social insurance contributions.

The main drawback of this scheme is that it does not cover any years that may have been spent looking after children before April 6, 1994.

Sunday Indo Business

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