Case study 1: Calculating your pension under EU social security agreements
This example shows how entitlement to State Pension (Contributory) is calculated under EU social security agreements.
Case study
Peter has worked in Ireland for the last 5 years. He is turning 66 years of age and wants to know if he will qualify for a State Pension (Contributory).
When Peter retires, he will have 260 contributions paid in Ireland. He worked in Germany for 10 years and paid 520 contributions there. He doesn't have any breaks in his employment record in Germany, i.e. he worked in Germany continuously for 10 years immediately before coming to Ireland.
Peter's wife Maria is 61 years of age, her only income is from work. She earns €250 per week.
Step 1
Calculate Peter’s notional rate of pension. This is the rate of State Pension
(Contributory) Peter would be entitled to if all his contributions were
assessed as Irish contributions.
To calculate the notional rate of pension, find the total of all Peter’s contributions (both foreign and Irish) divided by the number of years worked in Ireland and abroad to get his yearly average.
Total of all Peter's assessable contributions: 520 + 260 = 780 contributions
Total number of years worked: 10 + 5 = 15 years
Total number of contributions by the number of years worked: 780 ÷ 15 = 52.
Peter's yearly average number of contributions is 52.
Peter's notional rate of pension is the maximum rate because he has a yearly average contribution of 52, which is more than the required yearly average of 48 for the maximum pension. Therefore his notional rate of pension is the same as the maximum rate of State Pension (Contribution) of €230.30.
He is entitled to an increase in his payment for his wife. However, he is not entitled to the maximum rate of increase for a qualified adult because she is earning €250 per week. The rate of qualified adult increase payable is tapered for earnings between €100 and €310. The increase for his wife as a qualified adult is €48.50.
Add Peter's rate of notional pension together with the increase he gets for his wife: €230.30 + €48.50 = €278.80
Total notional pension rate: €278.80
Step 2
Then apply the formula (A x B) ÷ C = rate of State Pension
(Contributory)
A = the notional rate of pension
B = the number of Irish contributions
C = total number of contributions (Irish and foreign)
You take the figure for the notional rate of pension and multiply by the total number of Irish contributions:
€278.80 x 260 = €72,488
Next divide €72,488 by the total number of Irish and foreign contributions which we calculated earlier to be 780:
€72,488 ÷ 780 = €92.93
Peter’s rate of State Pension (Contributory) including an increase for his wife as a qualified dependant is €92.93.
Language
Related Documents
- Case study 2: Calculating your pension under bilateral social security
agreements
Case study showing how your entitlement to State Pension (Transition) is calculated under bilateral social security agreements in 2011. - State Pension (Contributory )
The State Pension (Contributory), previously called the Old Age (Contributory) Pension, is payable to people aged 66 and over who have worked and paid enough social insurance contributions. - State Pension (Transition)
The State Pension (Transition), formerly called the Retirement Pension, is a payment to people aged 65 who have retired from work and who have enough social insurance contributions.
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