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State Pension Eligibility Thumbnail

State Pension Eligibility

 

State Pensions are open to anyone resident in Ireland, regardless of whether the individual has made paid contributions or not. One is eligible for the State Pension after their 66th birthday. Prior to 66, a benefit payment is payable between ones 65th & 66th birthday. 

 It’s recommended to apply for the State Pension three months in advance of your 66th birthday. 

 On reaching age 66 in Ireland, two distinct pensions are available depending on your circumstances:

  1. State Pension (Contributory) – the ‘contributory’ title arises from PRSI contributions being made on Irish income. These contributions can start from age 16, when weekly income exceeds €38 per week.
  2. State Pension (Non-Contributory) – the ‘non-contributory’ title arises from the non-payment of PRSI contributions. One can receive this pension having never worked in Ireland or by generating insufficient contributions to qualify for the contributory pension. This non-contributory pension is means tested, however.  

The relevance of the State Pension (Non-Contributory) is diminishing, as demonstrated by the decreasing number of recipients so our focus will be on the State Pension (Contributory).

Statistics from 2022 indicate that while 101,000 individuals received the non-contributory pension, 537,000 were recipients of the contributory pension, showing an increasing disparity each year. To illustrate, in 2013, 99,000 people were beneficiaries of the non-contributory pension—a number that remained relatively stable by 2022. In contrast, those receiving the contributory pension increased from 400,000 in 2013 to 537,000 in 2022. 

The timeline below illustrates the entitlements of these expected benefits. The benefit payment between the age of 65-66 is a bridging payment until age 66 and will be explored in greater detail in a subsequent post.

Key consideration: In light of the changes announced in Budget 2024, one can now defer their pension up to age 70 and continue to generate PRSI contributions throughout this period to enhance their level of State Pension receivable. 

 

State Pension (Contributory)

 The State Pension (Contributory) depends on fulfilling specific PRSI, age, and residency requirements. Eligibility for this pension begins on your 66th birthday. 

 The Social Welfare (Miscellaneous Provisions) Act 2023 introduced several changes to the calculation methods and contribution criteria.  

This pension is not subject to a means test, meaning it is not affected by any other sources of income, such as rental earnings or private pensions. This marks a significant difference from the non-contributory pension. 

Additionally, recipients of the State Pension (Contributory) may continue to work or earn additional income, from activities like property rental or employment. 

To qualify for the State Pension (Contributory)

 You must satisfy both conditions below:

  1. Entered insurable employment before you turn 56 years of age, if your date of birth is before 1st January 1958, or for those born on or after 1st January 1958 you must have started paying PRSI contributions at least 10 years before you claim the pension.
  2. Have paid at least 520 full-rate PRSI contributions (Typically Class A and S) referred to as reckonable contributions.

If meeting this requirement is not feasible, alternatives include applying for the State Pension (Non-Contributory), or alternatively, under certain circumstances, individuals may be eligible for a Pro Rata Pension through an EU/Bilateral Agreement or due to a mixed insurance record involving both public and private sector PRSI contributions. 

 *Budget 2013 introduced the charging of PRSI on rental income from the 1st January 2014, and thus made contributions on rental income reckonable. If you are a PAYE worker and have unearned income over €5,000 you are a chargeable person and pay PRSI at 4%. 

Note: This document is based on our understanding and research from the Dept. of Social Protection as well as input from third party advisors. It is not exhaustive and some of the information/ practice is subject to interpretation.