The State Pension explained.
The State Pension has two versions, The Contributory State Pension and the Non-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|
|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 have done the following;
• Started paying social insurance before 56
• Have paid at least 520 full rate social insurance contributions
• 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 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.
If you don’t have the required level of social insurance contributions your contributary state pension can be reduced as follows:
|Yearly Average||Personal Rate (weekly)|
|48 or over||€248.30|
The Non-Contributary state pension is a means tested pension that may be paid to people aged 66 and over who do not qualify for a Contributary State Pension, or who qualify for a reduced Contributary Pension based on their social insurance contributions. Like the Contributory State pension, the Non-Contributary State Pension is taxable, it’s 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 look up https://www.welfare.ie/en/Pages/Qualifying-for-State-Pension-Contributory.aspx#q1
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 you to consider.
Starting a pension with DW Financial is quite straight forward;
Book a free consultation, this consultation usually last up to one hour and covers the following
- You: Age, marital status, family circumstances
- Your finances: Occupation, income, outgoings.
- Any pensions you may already have from previous employment
- Your financial goals
- Your plan between now and retirement
- You wishes for retirement
From the information we discuss in your free 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 Chris today to book your free retirement planning consultation where he 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 March 2018, the State pension in Ireland for a person aged 66 or over is €243.30 per week.