The Social Welfare Acts provide for two principal state pensions, commonly called the old age pension. The State Contributory pension requires satisfaction of social insurance contributions either paid or credited. The State Non-Contributory pension is means tested. The pensions were formerly, called the old age contributory or non-contributory pension.
Formerly ,the widow’s pension was available to a surviving widow. There was a contributory and non-contributory widow’s pension. Equality requirements have now been provided for a Survivors (widow/widowers) pension.
Entitlement to the State Contributory pension arises at the age of 66. See below in relation to the retirement/transition pension which arises at the age of 65.
The State Pension age is 66, and was due to rise to 67 in 2021 and 68 in 2028. These changes have been revoked for the moment.
The old age pension is a single flat rate pension. The rate increases for person over age 80. Supplements are paid for qualified dependents, adults or children.
A range of household benefits, such as free telephone, free travel, a degree of free electricity etcetera is available, which are subject to means test to certain extent. See the separate sections in this regard.
In order to qualify for the full State Contributory pension, a person must
- have entered insurable employment i.e. subject to social insurance prior to 56 years;
- have paid a certain number of contributions and
- have a minimum average annually of paid or credited contribution.
See our chapters on social insurance in respect of insurable employment. Entry into insurable employment means the date when the person becomes first becomes insured. This does not include insurance for occupational injury purposes only. A person may be insured as an employed or a self-employed person
Prior to 1988 self-employed persons were not insured for the State Contributory pension. Since 6th April 1988 self-employed persons have been subject to mandatory social insurance for the State Contributory pension.
Persons entitled to invalidity or transition pension before retirement age become automatically entitled to the State Contributory pension. The person must have at least 260 paid contributions, which is intended to be doubled in 2012.
The average contribution refers to the average of paid, or credited contributions from the date the person entered insurable employment or 1953 if earlier. The latter date is the date on which the modern social welfare code can be traced. The average number of annual contributions must be 48 to qualify for the full pension.
An alternative test allows for qualification based on an average of as little as 20 contributions from the introduction of the PRSI system in 1979. A lower number of contributions would entitle the pensioner to a reduced rate of pension.
The effect of the rules is that a person who has worked for a longer period but whose average contributions are less may qualify for a reduced pension. In contrast, a person who enters employment later, within 10 years of retirement may maintain the required average for that 10 years and thereby qualify for full rate.
A challenge on the grounds of constitutionality was rejected. The argument was made on the basis of its arbitrary and unreasonable effect. However, the courts are disinclined to intervene on constitutional grounds in relation to economic, social matters determined by the State. There are execptions.
There is relief for persons whose earnings exceeded earnings threshold for insurability prior to 1974 when it was abolished so that the gaps in records e otherwise filled. Equally, persons who are in the public service, who became self employed after 1988 are given relief in terms of year’s qualification.
Where a person spends a period as a homemaker after 1994 and does not have voluntary or credited contributions, up to 20 years maybe disregarded in calculating the average. A homemaker must be
- under pensionable age,
- not engaged in employment other than employment of an inconsiderable extent:
- reside and care for a child under 12 in a full time basis and
- provide e full care and attention to an incapacitated person who requires the same.
The person must make an application in the prescribed manner and in the prescribed time.
Because the rules on insurability worked in particular ways in previous years, the rules maybe anomalous. For this reason, certain exemptions or adjusted pensions exist for persons who fail to satisfy the average or general contribution requirements, for reasons traceable to such circumstances.
A person is disqualified from receiving the contributory old age pension, while imprisoned, lawfully imprisoned. The increment for children may still apply.
The transitional state pension, formerly the retirement pension is available to a person who satisfies the relevant conditions and retires at 65 years. Retirement is not a condition for the State Contributory pension, although in practice most employment and private pension schemes require or contemplate retirement at a certain age; typically, 65, 66 years.
The conditions for the retirement pension are almost identical to those for the state contributory pension. The person must have entered insurable employment before the age of 55 years, similar paid and or credited contributions are required together with the minimum early average.
The State Pension Transition formerly the retirement pension is available to a person who has retired when he has reached the age of 65 and not yet reached 66 after retirement from insurable employment or self-employment. The benefit is almost identical to the State Contributory pension. He must not engage in such employment. Where the person has attained 66, any period subsequent to that age whether or not he is engaged in employment.
Equivalent issues, on averaging 48 contributions apply. A persons with an average of at least 24 will qualify for a reduced pension. The required number of contributions is increased to 520 in 2012. There are increments for qualified adults and children. Household benefits are payable subject to a means test. Equivalent disqualification grounds apply.
Formerly, the equality laws did not prohibit the requirement for persons to retire at normal retirement age. This provision no longer exists, and contractual provision must be made for retirement.
The 2011 Act discontinues the State Pension (Transition) for new claimants with effect from 1 January 2014. The 2011 Act provides for an increase in the age for qualification for the State Pension from 66 years to 67 years from 2021, and a further increase to 68 years from 2028.
The 2012 Act makes provision relating to the payment of reduced rates of State Pension (Transition) so as to enable the increases payable in respect of a qualified adult, as well as the personal rates, to be paid at reduced rates where a person has a reduced yearly average. This change applied to people who attain 65 years of age on or after 1 January 2013. It provided that existing claimants for State Pension (Transition) would not be affected by this change.
The 2011 Act provide for the necessary amendments to increase the State pension age in line with the Government’s National Pensions Framework as set out in the EU/IMF Programme of Financial Support for Ireland, which must be implemented by the end of the second quarter of 2011.
The 2011 Act provides that the implementation of certain provisions of Schedule 6 to the Social Welfare Consolidation Act 2005, relating to changes in the entitlement conditions for State Pension (Contributory) and State Pension (Transition) with effect from 6 April 2012, do not apply to existing recipients of those pensions.
The 2011 Act provided for the increase in the minimum number of paid employment or self-employment contributions required to qualify for the State Pension (Contributory) and the State Pension (Transition) from 260 to 520 with effect from 6 April 2012.