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

## Case study

### 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 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

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

You can calculate this by dividing the total number of contributions (600) by the total number of years worked (34) since entering insurable employment.

 Mary’s Irish contributions 600 Total number of years worked* 34 Yearly average number of contributions 600 ÷ 34 = 17.65 (round up to 18)

* since entering into insurable employment to the end of the last complete tax year before reaching pension age

Mary's yearly average number of contributions is 18. She would qualify for a reduced Irish State Pension (Contributory) of €180.70 (in 2024).

#### Step 2

Second, you must 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.

You can calculate this by dividing the total number of contributions, both Irish and foreign (1,800), by the total number of years worked since entering insurable employment (34).

 Total assessable contributions 600 Irish contributions + 1,200 US contributions = 1,800 Total number of years worked* 34 Yearly average number of contributions 1,800 ÷ 34 = 52.9

*since entering insurable employment to the end of the last complete tax year before reaching pension age

Mary’s yearly average number of contributions is 52.9. You need a yearly average of 48 contributions to get the maximum State Pension (Contributory).

As Mary has more than enough contributions, her notional rate of pension is the same as the maximum rate of State Pension (Contributory), which is €277.30 (in 2024).

Step 3

Third, you calculate what pension Mary would get under bilateral security agreements. You do this by applying the following formula:

• (A x B) ÷ C = rate of State Pension
 A = Notional rate of pension (calculated in step 2) €277.30 B = Number of Irish contributions 600 C = Total number of contributions (Irish and foreign) 1,800

First, you multiply the notional rate of pension (A) by the total number of Irish contributions (B):

• €277.30 x 600 = €166,380

Then, you divide €166,380 by the total number of Irish and foreign contributions (C):

• €166,380 ÷ 1,800 = €92.43

Mary’s rate of State Pension (Contributory), calculated under bilateral security agreements, is €92.43.

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: 16 January 2024