The State pension explained

The State pension has two versions, The Contributory State Pension and the Non-Contributary 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 Contributary 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 Contributary 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
40-47 €243.50
30-39 €223.70
20-29 €212.10
15-19 €163.50
10-14 €102.20

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. 

Pension Contributions:

When saving for retirement there is a very defined was of seeing how much revenue say you can contribute towards your retirement in order to avail of tax relief. Below is a chart to show how much you can contribute towards your retirement.

AGE Maximum Contribution
29 or under 15%*
30-39 20%*
40-49 25%*
50-54 30%*
55-59 35%*
60+ 40%*

* These are percentages of your net relevant earnings up to €115,000

Tax Relief:

As with all pension contributions you can avail of tax relief on your contributions based on the level of tax you currently pay.
I.E. if you contribute €200 per month towards your retirement and pay the lower rate of tax which is currently 20% it has the following affect

Gross Contribution €200 per month
Tax Relief @ 20% €40  per month
Net Cost of Contribution €160 per month

If, however you pay the higher rate of tax, which is currently 40%

Gross Contribution €200 per month
Tax Relief @ 20% €80  per month
Net Cost of Contribution €120 per month