Will 15 years working in Ireland get us a full State pension?

My husband and I have both worked in the United States for at least 10 years (in his case) and 20 in mine. We have relocated back to Ireland and will probably work for another 15 years before retiring. Would this entitle us to a full Irish State pension under the current pension scheme and also the one that’s to supplant it?

I previously worked in Ireland for two years in my 20s. We relocated back here just before the pandemic. Now we are starting our own business at the end of the year. My husband never worked here up to now.

Ms V. S., email

Pensions are one of those areas where the thing most people want is certainty… but that’s not always possible. And so it is here. There are a lot of moving parts on pensions and the Government promises more is on the way. Mind you, they do have a habit of saying that without actually changing very much but we can only take them at their word.

The circumstances of you and your husband are fundamentally different by virtue of those two years you worked over here in your 20s.

That means under the old “yearly averaging” arrangement, your social insurance record will be measured from the time you first worked here until you reach retirement age.

I am assuming the 15 years you plan to work from here until 2036 will bring you up to the State retirement age – which, if the Government follows the recommendation of the recent Pensions Commission will be around 67½.

As you were working here at the age of around 22, the Department of Social Protection will tot up your 17-year social insurance record and average that over 46 years – ie the difference between the State retirement age when you are accessing the pension and your age when you first worked. That will give you an average of 19.6 weeks per year of your Irish working life.

I’m assuming they round up, which will be important in your case. At today’s rates, that would mean you got a weekly pension of €211.40 (compared with a full pension of €248.30). If they don’t round up, that figure would fall to €161.80 as your 19.6 week average falls on the tipping point between two bands.

They would also run your data through the newer Total Contributions Approach, where you need 40 years of contributions to secure a full pension and receive a pro-rata pension for anything less (as long as it is above the minimum 10-year contribution level). Under this scenario, you would fare worse, getting a half pension, or €124.15 in today’s money.

So, in your case, they would opt for the yearly averaging… if they can.

What do I mean by that? Well the Pensions Commission report urges the Government to finally phase out yearly averaging so that we do not have two systems in operation and because it is more inequitable. The proposal in the report is that they do this over 10 years.

If that happens and a decision is made fairly soon, the yearly averaging approach would have disappeared by the time you approached retirement age under your current plans. And while Irish governments are notorious for avoiding any hard decisions, there would be little objection to phasing out yearly averaging, especially with a 10-year tail-off to cater for anyone close to retirement.

The situation is even more acute for your husband. He has never worked here and, under yearly averaging, as long as he worked in Ireland and paid social insurance for the 10 years prior to State retirement age, he would get a maximum Irish State pension. His 15-year plan would more than cover him… as long as that arrangement is still available when he retires.

Otherwise he will lose out, being entitled to just 15/40ths of the full pension – €93.11 a week in today’s terms – under the new arrangement.

A couple of other things to note. As of now, self-employed people pay PRSI at a rate of just 4 per cent for which they receive almost full benefits – including the State pension. However, again, that Pensions Commission report suggests this should be increased to 10 per cent and subsequently 11.05 per cent to match the rates employers pay for employees on weekly earning in excess of €398.

So your social insurance bill as you open your new business is likely to rise over subsequent years.

Finally, both of you should be eligible for a pro-rata pension from the US authorities to cover the time worked in that country, an issue we covered last week.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email [email protected]. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into