With effect from the 1st of January 2024, changes to the State Pension (Contributory) are being introduced. This is because today in Ireland, people are living longer, are healthier and lead more active lives resulting in more people availing of state pensions for longer.

These changes include:

  • improved access to state pensions provision for long-term carers
  • better state pension flexibility
  • how state pensions are calculated

Access to the State Pension (Contributory) will improve for long-term carers

From January 2024 access to the State Pension (Contributory) will improve for long-term carers.

If you have spent more than 20 years providing full-time care to an incapacitated person, you may be entitled to enhanced state pension provision.

You will get the equivalent of paid contributions (long-term carer’s contributions) for periods of over 20 years spent caring to cover gaps in your contribution record needed to calculate the State Pension (Contributory).

More information on Long-Term Carers Contributions can be found here.

You will be able to apply for these contributions on MyWelfare.ie.

The State Pension (Contributory) will become more flexible

From January 2024, the State Pension (Contributory) will become more flexible.

You will be able to drawdown your pension at any age between 66 and 70 using flexible options.

This will give you the opportunity to continue to work which may improve your contribution record for when you decide to drawdown your State Pension (Contributory).

You will still be able to drawdown your pension at the age 66 in the same way as you can today. You can continue to work full-time after your pension is drawn down.

If you claim your pension beyond the age of 66, you may be entitled to an actuarially increased rate of payment. During deferral, you will be able to continue to make PRSI contributions to increase your personal rate of payment or meet the qualifying condition of 520 (10 years) contributions for State Pension (Contributory).

However, you will not be able to increase your contributions past the current maximum of 2080 (40 years). This means that it will be essential to know how many contributions you have before you are going to drawdown your pension.

A fairer method to calculate your State Pension (Contributory)

From January 2025 there will be a 10-year phased removal of the Yearly Average Method, which means that all pensions will be calculated using only the Total Contributions Approach (TCA) by 2034.

During the 10-year transition period, pensions will be calculated using two methods:

  • the first method will use the full TCA approach
  • the second method will, starting in 2025, calculate what your pension would be under the existing Yearly Average Method. The pension rate of payment will then combine 90% of this yearly average rate with 10% of the TCA rate. The proportion accounted for by the Yearly Average Rate will then reduce by 10% over each of the subsequent 9 years until the pension calculation is fully based on the TCA method only.

To help you estimate the rate of State Pension (Contributory) you may receive, you can request a copy of your Contribution Statement.

Source: Irish Independent, 12-11-2023.

How we help

We can help take the effort out of this for you by demonstrating how this would work for you and your family and providing you with one cohesive Holistic Lifestyle Financial Plan.

You can arrange a meeting by clicking here to access my diary, email info@smartfinance.ie or call 087 8144 104.