Sunday 4 December 2016

How the state pensions work

Published 16/12/2011 | 05:00

There are two types of state pension -- contributory and non-contributory -- for people who retire at the age of 66.

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The means-tested non-contributory pension is paid to around 98,000 people. It is given to those who did not have enough social insurance contributions. The maximum rate is €219 per week.

But the current Budget cuts apply to the contributory state pension, the most common. It is paid to around 290,000 people who had made a certain amount of social insurance contributions during their working lives. The maximum is €230 per week.

The system for evaluating how much a person gets from a contributory state pension is complex, but in general, it is based on the number of PRSI contributions a person makes.

Contributions

A full-time working person normally accumulates 52 PRSI contributions per year -- one for every week. And at the end of their working life, the number of contributions they have made are added up and then divided to get an average per year.

If a person has a career average of more than 48 PRSI contributions per year, they then qualify for a full state contributory pension.

But if a person has taken time out of work, they might have an average of less than 48 contributions per year.

There are different rates for these retirees, and the Government is going to cut them from September on.

The cuts are as follows:

• From €225.80 per week to €207 per week for those with a career average of 30-39 PRSI contributions.

• From €225.80 per week to €196 per week for those with a career average of 20-29 PRSI contributions.

• From €172.70 per week to €150 per week for those with a career average of 15-19 PRSI contributions.

• From €115.20 per week to €92 per week for those with a career average of 10-15 PRSI contributions.

Irish Independent

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