Under current eligibility conditions, an individual must have 520 full-rate paid contributions in order to qualify for standard State pension (contributory). 520 full-rate contributions equate to 10 years of full-rate insurable employment.
Currently applicants for the State Pension (Contributory) have their entitlement assessed under two separate criteria, the Yearly Average (YA) method and the Total Contributions Approach (TCA).
The YA method has been in place since the introduction of the contributory pension in 1961. The YA method sees all paid and credited contributions divided by time spent in the social insurance system to give an average of Social Insurance contributions per year with payments made on a banded basis. A yearly average of 48 reckonable contributions is required to qualify for the maximum rate.
The TCA was introduced with effect from 2018. It removes the time spent in the Social Insurance system as a factor and simply adds paid and credited contributions together. 2080 contributions (equivalent to 40 years) are required for a full rate payment with pro-rata payments for those who have the minimum required 520 paid contributions, but less than 2080.
On examining entitlement to pension, currently all applications are assessed under the YA assessment first. If a person is awarded the maximum rate of pension under the YA assessment, the TCA assessment is not applied. The Department does not, therefore, have a TCA assessment in respect of every application for State Pension Contributory.
However, of those reaching pension age in 2022, 17,327 (50%) were awarded a maximum rate State Pension Contributory under the YA calculation and 5,175 (15%) were awarded a maximum rate under the TCA calculation. 27% were awarded a reduced rate pension under the YA approach and 8% under the TCA calculation.
In a sample of 2,000 claims awarded a maximum rate pension under the YA approach, 67% would also have been awarded a maximum rate under the TCA approach.
It can also be assumed that, if a person is awarded the maximum rate of pension using the TCA assessment, that they did not qualify for maximum rate under the YA assessment. This also applies where a person is awarded a reduced rate of pension.
