Do pension stamps from 1960s and 1970s still qualify?

Q&A: I have a query regarding contributory pension. I am 62 years old and working. I paid “stamps” from 1968 to 1972 – 48, 51, 52, 52, five in each respective year. I was rearing children until 2001. I returned to work in 2001 and my recent contributions are: 2001=1; 2002=40; 2003 to date = 52 each year.

How will my contributory pension be calculated? If my earlier “stamps” are ignored, will I be entitled to a full pension? Do they have to take account of my early “stamps”?

Is there any way I can remedy the situation while I am still working?

Is there any credit given for years spent rearing children and/or caring for disabled husband?

Ms D.S., email

Sorting out State pension rights is certainly confusing. Every time you get a fix on it, they seem to change the rules. That’s exactly what happened this year.

As of April 2012, the rules for people who are not yet retired state that you will need to have a minimum of 520 PRSI contributions to qualify for a State contributory pension. Before that date, you would have qualified with just half that number.

In addition, you will need to have an average annual number of stamps of 10 or more.

A second change this year means that for anyone starting to receive a State pension after the beginning of September will have the rate of pension paid within a new set of contribution bands.

Prior to this, for instance, anyone with a yearly average of anywhere between 20 and 47 stamps would get the same payment. Now, the weekly payment can range from €196 for those with between 20 and 29 contributions to €225 a week if you have an average of somewhere between 40 and 47 weekly stamps per year.

A third factor affecting your position is the increase announced in the age at which the pension is paid. The transition pension, which was paid to people who retired at 65, is being phased out and, from 2014, no payment will be made until the State contributory pension kicks in at the age of 66.

Effectively, this raised the pension age to 66 and means you will be working (and building up PRSI stamps) for an extra year.

As you suspect, the calculations kick in from when you first paid PRSI until your retirement date. Thus your weekly average will be calculated from 1968 until 2016. You cannot simply get rid of earlier contributions to improve your position.

So where does all this leave you? Well, you had a total of 208 contributions paid before you took time out to raise your family. Since your return (to the end of this current year), you will have paid a further 561 contributions.

That total of 769 will grow over the next few years. To the end of 2015, when you will be 65, you will have amassed 925 contributions.

You clearly cross the first threshold – 520 lifetime contributions – but the situation is somewhat trickier when it comes to calculating the yearly average.

If you never worked beyond the end of this year and triggered the pension some time in 2016, you would have a weekly average of 16 contributions which, at present, would deliver a weekly State pension of €150.

To the end of 2015, you will have a weekly average of 19 contributions. That delivers the same weekly payment. However, if you can tip over to a weekly average of 20 contributions, your weekly pension rises to €196 at today’s rates.

Whether this works for you depends in the first instance on when in 2016 your 66th birthday is. If you pay 35 PRSI “stamps” in 2016, you will automatically qualify for the higher payment (assuming they don’t change the rules again between now and then). If your birthday is in the early part of the year, unfortunately you are likely to miss out by this calculation.

In that event, you need to see if you qualify by virtue of what are called “credited” contributions. Effectively, if you are in receipt of certain State benefits, you will be credited each week with a PRSI contribution even if you have not physically paid it.

A number of benefits are relevant, including illness benefit, jobseeker’s benefit, adoptive benefit, health and safety benefit and the invalidity pension. But from your perspective, the most relevant are likely to be maternity benefit and/or carer’s benefit.

If you were in receipt of maternity benefit at the time you started your family, you will have received a “credited” PRSI contribution during this period. The same is true if you were in receipt of a carer’s allowance at any time for taking care of your disabled husband.

Some people are slow to apply for benefits on the basis that they feel they can get by, but the PRSI stamp and its possible impact on retirement income illustrates the importance of doing so.

There is a separate provision – the Homemaker’s Scheme – designed to reflect the fact that working women take time out of paid employment to raise a family. The scheme effectively discounts those years when you were rearing children under 12 from the lifetime calculation of weekly average. The maximum number of years that can be discounted in this way is 20.

The bad news is that the scheme only came into force in 1994. My understanding, having spoken to the Department of Social Protection, is that people like you who left the workforce to raise a family before that date do not qualify, even though you were still raising your family when the measure was introduced.

From your point of view, the bottom line is that you will have 925 stamps at the end of 2015 and you need 960 to creep over the threshold to the higher weekly State pension payment.

This column is a reader service and is not intended to replace professional advice. Please send your questions to QA, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin 2, or to dcoyle@irishtimes.com. No personal correspondence will be entered into.