Change to the State Pension from 2024

From 1 January 2024, there will be changes to the contributory state pension that will allow for greater flexibility around when it can be drawn down. There will also be changes to how it is calculated.

Increased flexibility

There will be an ability to take the State pension at any age between 66 and 70, with an actuarially increased rate to reflect the later payment commencement date. Essentially, this means that you will have the option of working until you are 70 in return for a higher pension. There will also be an ability to make additional PRSI contributions after age 66 to increase the level of State pension, but there will remain an overall cap of 40 years of PRSI contributions. This change should be welcomed as the increased flexibility mirrors a changing society where people are living longer, there is increased demand to work longer and take a phased retirement.

Long-term carers 

The new provisions will recognise the role of long-term carers. This will mean that people who have to give up work over a long duration to look after a loved one will have their time spent caring recognised in the pension system. If you have spent more than 20 years providing full-time care to an incapacitated person, you may be entitled to enhanced state pension provision.

Change in how the State pension is calculated

There is currently a “yearly average method” approach to calculating the level of State pension, which is complex. From January 2025, there will be a ten-year phasing-in of a “total contributions approach” (TCA), with a target implementation date of 2034. This will recognise contributions (earned or credited) and home caring periods, up to 40 years to be entitled to the full State pension. Between 2025 and 2034, a hybrid of both approaches will be used.

Resources

The State pension explained 
gov.ie - State Pension (Contributory) (www.gov.ie)

How to request your contribution statement 
Contribution Statement (mywelfare.ie)