Does working a summer job as a young person affect average pension contributions?

techdiver

As the title states. If a young person has previously worked part time or even full time summer work between college etc. Would this ruin their average pension contributions?

To get a full contributory state pension you need an average of 48 contributions per year for your whole working life. If occasional work causes this average to be screwed up it would be a serious kick in the teeth for people who actually went out and worked when they could whilst still pursuing education.

Example: I had my first taxable job at 16. Does this mean my average contributions need to be calculated from the age of 16 or the age I finished college and actually obtained full time employment?

Does anyone have any hard facts on this as both citizens information of welfare websites are like trying to decipher hieroglyphs and also don't answer the above question.

CramCycle

I think you are confusing contributory with non contributory.

Non contributory is where you have not worked enough to entitle you to a full state pension right of the bat. In this case you will be means tested, and it will be awarded based on the results of that.

For contributory, which I think is what you meant, you must have started work before 56.
You need to have 520 contributions made ie worked for 10years
And the last which is what I think you are referring to is that you have to have made an average of 10 contributions a year, from the year you first started paying, so if it is 16, then it is from that year and you need to average 10 a year until retirement, which at the minute would be 52years of work, at 10 a year, so 520 contributions.

Its weird they bother with it at all as in my eyes it makes no difference so long as you hit the 520 but I could be wrong.

techdiver

CramCycle wrote: »

I think you are confusing contributory with non contributory.

Non contributory is where you have not worked enough to entitle you to a full state pension right of the bat. In this case you will be means tested, and it will be awarded based on the results of that.

For contributory, which I think is what you meant, you must have started work before 56.
You need to have 520 contributions made ie worked for 10years
And the last which is what I think you are referring to is that you have to have made an average of 10 contributions a year, from the year you first started paying, so if it is 16, then it is from that year and you need to average 10 a year until retirement, which at the minute would be 52years of work, at 10 a year, so 520 contributions.

Its weird they bother with it at all as in my eyes it makes no difference so long as you hit the 520 but I could be wrong.

Apologies, indeed I meant contributory.

From my reading of it, yes indeed you need a minimum of 520 credits over 10 years, but there are bands of qualification that decide the exact pension you are entitled to. From the website:

Normal average rule
The normal average rule states that you must have a yearly average of at least 10 appropriate contributions paid or credited from the year you first entered insurance or from 1953, whichever is later to the end of the tax year before you reach pension age (66). An average of 10 entitles you to a minimum pension; you need an average of 48 to get the maximum pension. Your yearly average will be rounded to the nearest number. For example, 9.4 is rounded down to 9 and 47.5 is rounded up to 48.

So in order to get a full pension you need an average of 48 contributions on average over your entire working life regardless or reaching the 10 year contributions. This to me basically means that I am screwed out of a full pension because my average will be started from the age of 16 as opposed to 23 when i actually started working properly. In essence I could work my entire life and not qualify for the full rate because I was sensible enough to work when I could as a younger person.

Or to put it another way. Someone could be a layabout for the majority of their life, then get a job at 56 and work full time and be entitled to a better pension than me at 66.

CramCycle

techdiver wrote: »

So in order to get a full pension you need an average of 48 contributions on average over your entire working life regardless or reaching the 10 year contributions. This to me basically means that I am screwed out of a full pension because my average will be started from the age of 16 as opposed to 23 when i actually started working properly. In essence I could work my entire life and not qualify for the full rate because I was sensible enough to work when I could as a younger person.

Or to put it another way. Someone could be a layabout for the majority of their life, then get a job at 56 and work full time and be entitled to a better pension than me at 66.

Damn it, seems a bit harsh, I worked full time through college but alot of people didn't. So joining the workforce early but then getting educated could screw you out of a full pension, or is there an allowance for education?

I missed the second bit.

Johnny Storm

its extremely unfair IMHO

techdiver

CramCycle wrote: »

Damn it, seems a bit harsh, I worked full time through college but alot of people didn't. So joining the workforce early but then getting educated could screw you out of a full pension, or is there an allowance for education?

I missed the second bit.

Johnny Storm wrote: »

its extremely unfair IMHO

Yeah, runs complete contrary to the message you should be sending people and especially young people. Although the fact that ii is such an unknown rule, hardly anyone knows the ramifications. It's essentially cutting the pensions bill by stealth!

.......

Yes this is true and no one ever finds out about it until its far too late.

How can you find out the number of contributions you have made to date?

cruizer101

Well feck that I think I'm in the same boat, some quick calculations and looks like even with 52 per year for rest of my life I'll only hit 46 ish avg, thats a kick in the balls.

I did see something about voluntary contributions, does that mean you can pay more prsi to make some more contributions to top yourself up?

tayto lover

If you hadn’t the 520 contributions but had something like 440 would you still get a portion of the pension?

marketty

techdiver wrote:

Or to put it another way. Someone could be a layabout for the majority of their life, then get a job at 56 and work full time and be entitled to a better pension than me at 66.

What, and I cannot stress this enough, the fxck?

I suppose the official line on this is if you've been working for 50 years you should have funded your own private pension, so tough luck.

Absolutely crazy though when you think of it the way you've explained!

Francie Barrett

I thought that averaging was going to change?

https://www.irishtimes.com/business/personal-finance/state-pension-review-could-lead-to-increases-for-many-people-1.3690934

However, the new regime will be used to assess entitlement for everyone retiring after it is introduced in 2020.

Until now, eligibility has been based on having a minimum number of overall PRSI “stamps” or contributions – currently 520 – and then working out the average of those contributions over your working life (from the date you first worked until State retirement age).

The weakness with the system was that if you only arrived in Ireland aged 55 and worked for 10 years, you would meet the 520 criterion and have an annual average of 52 stamps, qualifying for the top weekly pension payment.

However, if you started work at 17 and worked for 30 years – taking time out to rear a family or travel – your annual average, and therefore your weekly pension, would be lower even though you had contributed far more in social insurance.

The new “total contributions approach” will work off the basis that 40 years of contributions will guarantee a full pension – regardless of the length of your working life. Averaging will disappear. It will also allow credits for new home-caring periods to take account of time spent out of the workplace for parenting or caring duties.

The reviews are expected to take a number of months to complete due to the numbers involved. They will begin as soon as the Social Welfare Bill is signed into law.

So if you work for 40 years, you are guaranteed the full state pension.

jimmycrackcorm

Francie Barrett wrote:

So if you work for 40 years, you are guaranteed the full state pension.

Currently that means you need to start and work continuously from age 26.

Don't go traveling after that.

.......

Francie Barrett wrote: »

I thought that averaging was going to change?

https://www.irishtimes.com/business/personal-finance/state-pension-review-could-lead-to-increases-for-many-people-1.3690934
So if you work for 40 years, you are guaranteed the full state pension.

I dont think this applies to people like us who are already in the work force?

Francie Barrett

....... wrote: »

I dont think this applies to people like us who are already in the work force?

It does actually, but my guess is that they'll phase the changes in. If you retire on 2020, maybe you might only need 20 years of contributions. If you retire on 2030, maybe you will need 30 years.

At a guess, I would say anyone under the age of 40 or so would be expecting to have to chip in the full 40 years of PRSI contributions

.......

Francie Barrett wrote: »

It does actually, but my guess is that they'll phase the changes in. If you retire on 2020, maybe you might only need 20 years of contributions. If you retire on 2030, maybe you will need 30 years.

At a guess, I would say anyone under the age of 40 or so would be expecting to have to chip in the full 40 years of PRSI contributions

Oh thats a bit hopeful.

How do you find out how many contributions you have?

rubberdungeon

Request a copy of your Social Insurance contributions record on www.MyWelfare.ie

Social Insurance Contribution Statements are now available online at www.mywelfare.ie

Please visit MyWelfare to request a Contribution Statement. If you do not already have one, you will need to create a MyGovID account online. For this you will be required to provide an email address and some personal information. MyGovID is a secure online account that will enable you to access a broad range of Government services online including your Contribution Statement on MyWelfare.

Once you create a Basic MyGovID account, you can request your Contribution Statement to be posted to the address on file. A printed copy will be sent to your postal address, provided that the PPSN, Date of Birth and address you provide satisfy an automated matching process as against the relevant details held by the Department.

If you upgrade to a Verified MyGovID account, you will have instant access to your Contribution Statement once your account has been verified. You can also opt to have a PDF copy of your record sent to your MyWelfare account. In order to have a verified account, you need to hold a PSC and have your mobile phone number verified in an Intreo Office.

A person who is not in a position to use the online facility to request a statement can contact the Department’s customer service team for assistance on (01) 4715898. Customers who wish to use a LoCall option can call from a landline on 1890 690 690. The customer service team is available to assist from 9am to 5pm; and is also open during lunchtime.

https://www.welfare.ie/en/Pages/secure/RequestSIContributionRecord.aspx

.......

Thank you Rubberdungeon - most useful.

rosmoke

This is still completely unfair, even the new revised method.
I started working just one month before I turned 16, and I worked a couple of months a year, and study in the same time.
This would dramatically lower my average.

So we are basically penalised because we chose to be productive and contribute to the society!

Francie Barrett

rosmoke wrote: »

This is still completely unfair, even the new revised method.
I started working just one month before I turned 16, and I worked a couple of months a year, and study in the same time.
This would dramatically lower my average.

So we are basically penalised because we chose to be productive and contribute to the society!

Not sure if you read what I wrote, but averaging is being done away with, only your total number of contributions will matter.

_Brian

We had a guy retire a few years ago and his contributory was reduced as he had starting working at 17 which stretched his average way more tham he expected.
It’s a stupid system.

rosmoke

Francie Barrett wrote: »

Not sure if you read what I wrote, but averaging is being done away with, only your total number of contributions will matter.

Just read the article again, has this change happened already or they are only considering this?

Francie Barrett

rosmoke wrote: »

Just read the article again, has this change happened already or they are only considering this?

Due to come in for 2020

Purple Mountain

Could someone voluntarily delay receiving their pension say until 68/69 and continue working until then if it meant that this sorted out their average issue?

Geuze

It took me a while to realise the full implications of the three conditions to receive a SI pension.

The third condition is complex - the average condition.

Yes, OP is correct, entering the SI system early, and then having a break in contributions, could mean receiving a lower pension.

Geuze

A person could arrive from EU, aged 55.

Work ten years, pay 520 conts.

Then get a full SI pension at age 66.

margo321

i think it was changed a few years ago that they look at average since starting work. screws people who have gap in working history. good old politicians.

pummice

The new fairer system called "total contributions approach" is due to come in 2020. However there is no guarantee that this will happen, the government have changed the goalposts recently and can easily do so again. I was expecting to get my state contributory pension at 65 now I am told it will be 67, for others it will be 68. It would not surprise me if there is a delay in the introduction of the total contributions system. This lack of clarity for workers is totally disgraceful. Nobody can plan ahead because they dont know how much their pension will be. The contrast with the gold plated pension benefits for tds and ministers is stark.