Changes to the State Pension (Contributory) are happening in 2024.
The Contributory State Pension is a state benefit paid to people who have made enough PRSI contributions throughout their working life. It is currently paid from the age of 66. It is often referred to the old age pension.
This pension is not means tested, so is available to anyone who qualifies regardless of any other income they have such as private pensions or part time work. The current state pension (from January 2024) is €277.30 per week. The pension is taxable but you are unlikely to pay tax if the State Pension is your only source of income.
If you retire at 65, you may also qualify for a benefit payment for the year until the State Pension commences at 66. In order to qualify for this payment at 65, you have to have ceased working.
If you have gaps in your PRSI records you may still qualify for a contributory pension using the ‘Total Contributions Approach’ (TCA). Using this approach, the rate of the pension you would qualify for is based on the total number of contributions you have made over your lifetime until the age of 66.
Up to 20 years of homemaking and caring duties can be used as qualifying years. You would qualify for the maximum rate of State Pension (Contributory) if you have 2080 or more contributions (or 40 years of employment – including up to 20 years home caring). If you have less than the 2080 contributions required for a full pension, you could still qualify for a high proportion of the pension if you have a number of years in the workforce.
PRSI was introduced for Self Employed people in April 1988. If you had paid employee PRSI prior to this date, you can either choose the date when you first paid employee PRSI or April 1988, whichever gives you a higher pension. Typically speaking, if you worked full time as a self employed person for the 10 years prior to retirement, you should qualify for a full contributory State Pension.