Your guide to ensuring you don’t lose out in State pension revamp

By February 21, 2018Press, Retirement Advice
NYC Supermoon

Some pensioners will be almost €2,000 a year better off under this year’s changes to the system, but others will lose out

Irish Independent

by Louise McBride, February 11 2018

Tens of thousands of people who had their State pension cut in recent years are set to get that cut reversed under a pensions overhaul announced by Social Protection Minister Regina Doherty last month. However, not everyone will end up with a better pension under the changes.

What has been overhauled?

Doherty has introduced a new approach for those whose State pensions were cut as a result of changes introduced in 2012. Under the new system, which is known as the Total Contribution Approach (TCA), the total amount of social insurance contributions paid by, or credited to, an individual – rather than the timing of them – will determine the rate of State pension they’re entitled to. A new HomeCaring credit will also be introduced which will give more parents credit for time taken out of the workforce to rear children – and so improve their chances of qualifying for the full State pension.

The aim of the TCA is to have the contributory State pension (the pension linked to one’s social insurance contributions) paid out in a fairer way than it is under the current ‘averaging’ system. “The averaging system used since 1961 could result in the anomaly where two people with the same number of social insurance contributions get paid different rates of pension,” said a spokeswoman for the Department of Social Protection. “Under the TCA, this anomaly will not arise.”

How will the credit work?

The HomeCaring credit will be similar to the Homemaker’s Scheme which is already in place – but with one big difference.

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