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Working abroad can help you get an Irish pension

Gerard Scully | Senior Information Officer | Age Action
Written by: Gerry Scully
Senior Information Officer
31/01/2018

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Lots of Irish people worked in Britain, the US, Europe and further afield before coming home. Gerry Scully explains how the pension contributions they made while working abroad can be used to get a better pension in Ireland.

Fair State Pension

Question

Dear Age Action,

I worked abroad for a few years and made social security contributions and I'm now back living in Ireland. I've heard that my contributions outside of Ireland can be used to get a better pension here. Is that correct?

Michelle from Ennis 

Answer

Depending on where you worked, the answer is yes.

You can use them if you don’t have enough Irish Contributions or to possibly get a pension from the other country or countries in which you worked.

If you worked in one or more countries with which Ireland has a bilateral social security treaty you can use contributions you made in those countries to increase the value of your Irish pension. 

Ireland has nine separate bilateral treaties with foreign countries that allow people claiming Irish pensions to use the contributions they made there to get a better pension. 

The exact system for doing this varies from country to country but they are roughly similar. And remember that because we are part of the European Union we have default agreements with the other 27 countries of the EU.  

How it works

When you apply for an Irish State Pension you are asked to indicate if you worked abroad and to give details of any employment you had while abroad.  This will include name of employer, your address and your social security number while there. 

If you do not have enough Irish contributions to entitle you to a full pension (at least an average of 48 over your working life) the Department of Employment Affairs and Social Protection will automatically contact the equivalent department in the other country or countries you’ve worked to find out what contributions you made there.

The Department of Employment Affairs and Social Protection will then use the combination of your Irish and foreign contributions to figure out the pension you should get.  

The United States will also allow you to use your Irish contributions to qualify for a full American pension even if you are also using them to get a pro-rata pension from the Irish government. In effect, you can use the same Irish contribution twice.

It really is worth checking with the social security department in each country you have worked to see how they calculate pension entitlement using foreign contributions.  

Colm's story

It might be easier to understand if we have an example. Colm worked for five years in Ireland and 30 years in the United States. He has 280 Irish contributions and 560 American.

Since he doesn’t have enough Irish contributions he would not normally be eligible for a State Pension but because there is a treaty with the United States he can use his American contributions.

The Department adds together his Irish and American contributions to get a figure of 840 which is divided by the 35 years of Colm's working life to give a yearly average of 24.

In theory, this would entitle him to a pension of €202.80.

But because Ireland uses the principle of pro-rata payment there is a second calculation to determine the portion of your entitlement that Ireland will pay. 

They multiply the notional pension entitlement €202.80 by the number of Irish contribution and divide the answer by the total number of contributions

So, 202.80 is multiplied by 280 and then divided by 840 to give Colm a total weekly State Pension of €67.60.

He might also be entitled to some form of pension from the United States and he should contact them to find out.

Countries with which Ireland has these agreements

  • All EU member states
  • Australia
  • Canada
  • Japan
  • New Zealand
  • Quebec (They have a slightly different protocol than the rest of Canada)
  • Republic of Korea
  • The Swiss Confederation
  • The United Kingdom (at the moment covered by EU regulations)
  • The United States of America

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Comments

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My understanding is that you can only use contributions from another country if you do not have the minimum contributions necessary ( 520) in Ireland. You cannot use overseas contributions to increase you average if you have more that 520 contributions.

Hi Desmond,

Thanks for getting in touch with Age Action. While one of the outcomes of using foreign contributions is to allow an individual to qualify for a State Contributory Pension if they do not have the required minimum 520 contributions it is also possible that foreign contributions may increase the level of your Irish State pension. It is true however that the method used by the Irish State to calculate an individual’s level of pension, when combining Irish and Foreign contributions, makes it unlikely that your Irish State pension will increase. As we said in the blog the Irish State will only pay a pro-rata pension, i.e. a portion of the pension that the combined contributions would entitle an individual to if all contributions were Irish. There is no rule that excludes the possibility of increasing the Irish portion of the pension by using foreign contributions.

Can you confirm that the Minimum Retirement Income is Euro 12,700 and not Euro 18,000. Last year my wife transferred her occupational pension to an AMRF on the basis that the minimum retirement income was 12,700.

Hi Desmond according to the Pensions Authority Website the minimum retirement income is €12,700. The figure of €18,000 was introduced in rule changes in 2011 but in the Finance Act of 2013 the new 2011 rules were rescinded meaning the figure of €12,700 applies at the moment. The 2011 rules were due to come into force again in 2016 but have not done so.

It may be useful for some to know that a person who qualifies for a full Irish Contributory pension (based on Irish contributions) may also qualify for a partial UK pension (based on UK contributions).

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