The State Pension explained.

The State Pension has two versions, the Contributory State Pension and the Non-Contributory State Pension.

Contributory State Pension

The Contributory State Pension is currently paid to people from the age of 66, who have enough Irish social insurance contributions.
The age at which people qualify for the State Pension changed to 66 in 2014, this is due to change again in 2021 and 2028. To see when you could qualify for the state pension look at the table below:

Year of Birth State Pension Age
Up to and including 1954 66
1955 -1960 67
1960 and later 68

The Contributory State Pension is not means-tested, you can have other incomes and still get the State Pension. Although the Contributory State Pension is taxable, it’s unlikely to be taxed if it is the only source of income you have in retirement, as anyone over the age of 65 only pays income tax on earnings above €18,000. Currently the full State Pension is €248.30 per week or €12,911.60 per year.

To qualify for the Contributory State Pension you must meet the two following conditions:

• Started paying social insurance before 56
• Have paid at least 520 full rate social insurance contributions

To qualify for full State Pension you must then also have a yearly average of at least 48 paid and/or credited full rate contributions from the year you started insurable employment, until you reach 66 years of age.

If you don’t have the above, then you may qualify for a reduced rate pension. In order to qualify for this you must have a yearly average of at least 10 paid and/or credited full rate contributions from the year you started insurable employment to the end of the contribution year before you reach the age of 66.

The following table shows the rate of pension payable based on the individual’s number of contributions:

The State Pension explained.

The State Pension has two versions, the Contributory State Pension and the Non-Contributory State Pension.

Contributory State Pension

The Contributory State Pension is currently paid to people from the age of 66, who have enough Irish social insurance contributions.
The age at which people qualify for the State Pension changed to 66 in 2014, this is due to change again in 2021 and 2028. To see when you could qualify for the State Pension look at the table below:

Year of Birth State Pension Age
Up to and including 1954 66
1955 -1960 67
1960 and later 68

The Contributory State Pension is not means-tested, you can have other incomes and still get the State Pension. Although the Contributory State Pension is taxable, it’s unlikely to be taxed if it is the only source of income you have in retirement, as anyone over the age of 65 only pays income tax on earnings above €18,000. Currently the full State Pension is €248.30 per week or €12,911.60 per year.

To qualify for the Contributory State Pension you must meet the two following conditions:

• Started paying social insurance before 56
• Have paid at least 520 full rate social insurance contributions

To qualify for a full State Pension you must then also have a yearly average of at least 48 paid and/or credited full rate contributions from the year you started insurable employment, until you reach 66 years of age.

If you don’t have the above, then you may qualify for a reduced rate pension. In order to qualify for this you must have a yearly average of at least 10 paid and/or credited full rate contributions from the year you started insurable employment to the end of the contribution year before you reach the age of 66.

The following table shows the rate of pension payable based on the individual’s number of contributions:

Yearly Average Personal Rate (weekly)
48 or over €248.30
40-47 €243.40
30-39 €223.20
20-29 €211.40
15-19 €161.80
10-14 €99.20

Non-Contributory State Pension

The Non-Contributory State Pension is a means tested pension that may be paid to people aged 66 and over who do not qualify for a Contributory State Pension, or who qualify for a reduced Contributory Pension based on their social insurance contributions. Like the Contributory State Pension, the Non-Contributory State Pension is taxable. However, it is unlikely to be taxed if it is the only source of income as anyone over the age of 65 only pays income tax on earnings above €18,000.

For further information in relation to the State Pension take a look at https://www.gov.ie/en/service/e6f908-state-pension-contributory/

Could you survive on the State Pension alone?

If the answer is no, and you’re hoping to have a financially secure future, then starting a pension should be one of the first steps for you to consider. Starting a pension through DW Financial is quite straight forward.

Book a free consultation which usually lasts up to one hour and covers the following:

  •  Personal details: Age, marital status, family circumstances.
  •  Your finances: Occupation, income, outgoings.
  •  Any pensions you may already have from previous employment(s).
  •  Your financial goals from now until retirement.

From the information we discuss in your consultation we design your tailored retirement plan and present our recommendations.
Because there are several pension options available to you, deciding what’s best for you can be difficult.
Contact us today to book your free consultation where we will discuss all your options and help you put a plan for retirement in place.

What will your finances look like in retirement? 

If after working hard for most of your life, when you reach retirement, wouldn’t it be nice to have the money you need to maintain your standard of living in retirement? 

From June 2020, the State Pension in Ireland for a person aged 66 or over is €248.30 per week. 

Projected Pension Quotation

Here is an example of a projected pension quotation. 

Individual aged 30. Salary of €38,000. Target pension of 66% of current salary i.e. €25,080 

Retirement age = 68 

State Pension =  €12,912

Balance to be funded by pension contributions = €12,168

Projected Pension Requirement:

To achieve a target pension at retirement of €25,080, the required extra monthly contribution would be as follows:

The Age You Start Your Contributions 30 35 40 45
Yearly as % of Salary 16% 19% 24% 31%
Gross Per Month: 520 590 755 995
Less Tax Reliefs: 208 236 302 317
Net Contributions Per Month 312 354 453 678

 

Tax relief based on 40% tax rate

**€72 per week invested in a pension can give you an extra €234 per week in retirement **

Warning: Past performance is not a reliable guide to future performance.

Warning: Benefits may be affected by changes in currency exchange rates.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in these products you may lose some or all of the money you invest.

Projected Pension Quotation

Here is an example of a projected pension quotation. 

Individual aged 30. Salary of €38,000. Target pension of 66% of current salary i.e. €25,080 

Retirement age = 68 

State Pension =  €12,912

Balance to be funded by pension contributions = €12,168

Projected Pension Requirement:

To achieve a target pension at retirement of €25,080, the required extra monthly contribution would be as follows:

The Age You Start Your Contributions 30 35 40 45
Yearly as % of Salary 16% 19% 24% 31%
Gross Per Month: 520 590 755 995
Less Tax Reliefs: 208 236 302 317
Net Contributions Per Month 312 354 453 678

 

Tax relief based on 40% tax rate

**€72 per week invested in a pension can give you an extra €234 per week in retirement **

Warning: Past performance is not a reliable guide to future performance.

Warning: Benefits may be affected by changes in currency exchange rates.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in these products you may lose some or all of the money you invest.