Pay related social insurance (PRSI) was extended to self employed people from April 1988, as Class S PRSI. Class S benefits cover a range of pensions including State pension (contributory).
At the same time, a concession was made to those who first started paying Class S insurance from April 1988, which allowed any previous social insurance record they may have had to be disregarded when eligibility for pension was being assessed, if it was more beneficial to the individual concerned. Self-employed people who commenced paying contributions after April 1988 are treated the same as other contributors.
Furthermore, a special half-rate pension for the self-employed was introduced in April 1999 which enabled people who were over age 56 at the time of the introduction of Class S PRSI in 1988, and who could not therefore meet the standard qualifying conditions, to receive a contributory pension.
To qualify for the special half-rate self-employed State pension (contributory) a self-employed person must have:
1. been aged 56 or over on 6 April 1988;
2. paid social insurance contributions as a self-employed person on or after this date; and
3. have at least 260 full-rate social insurance contributions paid on a compulsory basis since first starting to pay social insurance contributions as a self-employed person.
The personal rate and increases for a qualified adult and a qualified child are paid at 50% of the standard maximum rate.
For State pension (contributory) qualification purposes, Class S self-employment contributions are treated like any other full rate social insurance, although these contributions are not reckonable when calculating entitlement to State pension (transition).
In the case of a State pension (contributory) a person must satisfy certain qualifying conditions. The person must have:
1. entered into insurable employment before age 56;
2. have at least 260 weeks full-rate contributions paid; and
3. a yearly average of at least 10 contributions recorded (taking paid and credited PRSI Contributions into account) from 1953 or from the date of entry into insurance (whichever is the later) to the end of the last complete contribution year before reaching pension age.
In order to qualify for the maximum rate a yearly average of 48 contributions is required.
In the case of self-employed individuals, a further condition is that all outstanding liabilities incurred as a result of their self-employed activities must be fully discharged to the Revenue Commissioners.
An individual who fails to qualify for a State pension (contributory) pension, may apply for a State pension (non-contributory) which is a is means tested payment.