State Pension (Contributory)
Coverage
Mandatory insurance
- All persons over the age of 16 who are working must pay PRSI. This includes all employees, whether full-time or part-time, earning EUR 38 or more per week, and self-employed workers with an income of EUR 5,000 a year or more.
Financing
General finances
- This scheme is financed in a PAYG manner by insurance contributions by both employees and employers into the Social Insurance Fund.
Contribution rates
- Employee contributions vary with respect to earnings and the social insurance class the employee is insured under. The class of insurance is determined by the nature of the employment and the weekly earnings. For example, Class A employee PRSI is calculated at 4% of gross weekly earnings. Whereas Class H PRSI is calculated at 3.9% of gross weekly earnings.
- Employers pay 8.8% on earnings under EUR 378 per week and 11.05% on earnings over this amount (for Class A employees). For employees the contribution ceiling is 4% and for employers it is 11.05%.
Taxation of contribution payments
- No tax exemptions for contributions.
Administration
- It is administered by the Department of Employment Affairs and Social Protection.
Qualifying Conditions
Qualifying conditions
- Statutory retirement age is 66.
- To receive the maximum benefit, a person must have sufficient full-rate PRSI contributions. There are two alternative methods of calculation with the most beneficial scheme being applied to the recipient. To qualify for a maximum State Pension using the Total Contributions Approach, a person will need 2,080 or more PRSI contributions (or 40 years of employment) or 48 contributions per year if using the older average approach to calculation.
- The full-rate contributions must have started to be paid before the person reaches the age of 56.
Early retirement
- The earliest this payment can be received is on reaching the State Pension age of 66 years.
Deferred retirement
- This is not possible.
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefit.
- The pension is not affected by continuing employment.
Benefits
Pension benefits
- The payment is a weekly flat-rate payment dependent on the contribution record.
- Maximum amount is EUR 248.30 per week in 2021.
- Minimum amount is EUR 99.20 per week in 2021.
- An automatic increase of EUR 10 per week is paid when the person reaches 80 years.
Benefit calculation
- Calculations to determine the level of benefit can be carried out using two alternative methods, the most beneficial calculation being applied in favour of the recipient. The older average rule relies on a rather crude calculation which averages the number of contributions by the length of time the person has been paying PRSI with 48 PRSI contributions per year entitling the recipient to a full State Pension. The newer model (which will eventually replace the average model) called the total contributions approach looks only at the total contributions made with 40 years of employment entitling the recipient to a full State Pension. The flat rate is proportionately reduced where there are more limited average or total contributions.
Taxation and social security contributions
- The payment is subject to tax.
- There are no other social security contributions.
Coverage
Financing
Administration
Qualifying Conditions
Benefits
Mandatory insurance
- All persons over the age of 16 who are working must pay PRSI. This includes all employees, whether full-time or part-time, earning EUR 38 or more per week, and self-employed workers with an income of EUR 5,000 a year or more.
General finances
- This scheme is financed in a PAYG manner by insurance contributions by both employees and employers into the Social Insurance Fund.
Contribution rates
- Employee contributions vary with respect to earnings and the social insurance class the employee is insured under. The class of insurance is determined by the nature of the employment and the weekly earnings. For example, Class A employee PRSI is calculated at 4% of gross weekly earnings. Whereas Class H PRSI is calculated at 3.9% of gross weekly earnings.
- Employers pay 8.8% on earnings under EUR 378 per week and 11.05% on earnings over this amount (for Class A employees). For employees the contribution ceiling is 4% and for employers it is 11.05%.
Taxation of contribution payments
- No tax exemptions for contributions.
- It is administered by the Department of Employment Affairs and Social Protection.
Qualifying conditions
- Statutory retirement age is 66.
- To receive the maximum benefit, a person must have sufficient full-rate PRSI contributions. There are two alternative methods of calculation with the most beneficial scheme being applied to the recipient. To qualify for a maximum State Pension using the Total Contributions Approach, a person will need 2,080 or more PRSI contributions (or 40 years of employment) or 48 contributions per year if using the older average approach to calculation.
- The full-rate contributions must have started to be paid before the person reaches the age of 56.
Early retirement
- The earliest this payment can be received is on reaching the State Pension age of 66 years.
Deferred retirement
- This is not possible.
Combining employment & retirement
- Termination of employment is not a precondition for claiming pension benefit.
- The pension is not affected by continuing employment.
Pension benefits
- The payment is a weekly flat-rate payment dependent on the contribution record.
- Maximum amount is EUR 248.30 per week in 2021.
- Minimum amount is EUR 99.20 per week in 2021.
- An automatic increase of EUR 10 per week is paid when the person reaches 80 years.
Benefit calculation
- Calculations to determine the level of benefit can be carried out using two alternative methods, the most beneficial calculation being applied in favour of the recipient. The older average rule relies on a rather crude calculation which averages the number of contributions by the length of time the person has been paying PRSI with 48 PRSI contributions per year entitling the recipient to a full State Pension. The newer model (which will eventually replace the average model) called the total contributions approach looks only at the total contributions made with 40 years of employment entitling the recipient to a full State Pension. The flat rate is proportionately reduced where there are more limited average or total contributions.
Taxation and social security contributions
- The payment is subject to tax.
- There are no other social security contributions.
Legal Basis: Social Welfare (Consolidation) Act, 2005; Social Welfare (Consolidated Claims, Payments and Control) Regulations 2007 (S.I. No. 142 of 2007); Social Welfare and Pensions (No. 2) Act 2009; Social Welfare and Pensions Act 2011; Social Welfare (Consolidated Claims, Payments and Control) Regulations 2007 to 2012.