# Case study 2: Calculating your pension under bilateral social security agreements

### Case study

Mary worked in Ireland for just over 11 years and has 600 Irish contributions. She has spent the last 23 years working in the US and has 1,200 contributions paid there. In total she has worked for 34 years since first entering into insurable employment.

She will be 66 next month and has returned to Ireland to retire. She wants to know if she will qualify for the State Pension (Contributory) when she is 66 years of age.

Step 1

Firstly you must check whether Mary would qualify for an Irish State Pension based on her Irish contributions alone.

Mary's Irish contributions: 600

Total number of years worked (since entering into insurable employment to the end of the last complete tax year before reaching pension age): 34 years

Total number of contributions by the number of years worked: 600 ÷ 34 = 17.65

Mary's yearly average number of contributions is 18. She would qualify for a reduced Irish State Pension (Contributory) of €152.00 (in 2016).

Step 2

Calculate Mary’s 'notional rate of pension'. This is the rate of State Pension Mary would be entitled to if all her contributions were assessed as Irish contributions. To find the notional rate of pension, calculate the total of all Mary’s contributions (both foreign and Irish) and divide it by the number of years worked in Ireland and abroad.

Total of all Mary's assessable contributions: 600 + 1200 = 1,800 contributions

Total number of years since entering into insurable employment to the end of the last complete tax year before reaching pension age: 34 years

Total number of contributions by the number of years worked: 1800 ÷ 34 = 52.9

Mary’s yearly average number of contributions is 52.9

Mary’s notional rate of pension is the maximum rate because she has a yearly average contribution of 52.9. This is more than the required yearly average of 48 for the maximum State Pension (Contributory).

Therefore, her notional rate of pension is the same as the maximum rate of State Pension (Contributory) of €233.30.

Step 2

Then apply the formula (A x B) ÷ C = rate of State Pension

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 (B):

€233.30 x 600 = €139,980

Next, divide €139,980 by the total number of Irish and US contributions which we calculated earlier to be 1800:

€139,980 ÷ 1800 = €77.76

Mary’s rate of State Pension (Contributory) would be €77.76. In this case Mary would be better off claiming a State Pension based on her Irish contributions alone rather than one calculated under bilateral social security agreements.

Page edited: 22 January 2016