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Pensions redux… January 23, 2020

Posted by WorldbyStorm in Uncategorized.

Here’s something I wasn’t fully aware of, having read about it a while back but not really delved into. A letter in the IT notes:

With all the electioneering attention around the changes to the age of retirement, nothing is being said about the proposed changes to the calculation of the pension payments to the total contribution approach (TCA) system. This was introduced in March 2018 as an alternative to the yearly average model which, with the inclusion of the 20-year home caring credit, benefits many who have taken time out to care for children, etc. At present people retiring are paid at the best rate achieved on either of the systems.
However, according to the Citizens Information service, the TCA system is to replace the yearly average system from “around 2020 onwards”. This no doubt will impact heavily on anyone who has lived and worked abroad for part of their life and now, nearing retirement, will find themselves with far less pension than expected based on the system that is currently in place.A person who lived abroad outside the EU or countries that are not part of the bilateral social security agreement for 20 years and then moved back to Ireland and worked 20 years here can currently, on the yearly average system, expect a pension of €211 per week. However, on the new TCA system they will only receive €124 per week.
Although the new TCA system is fairer in many respects, it needs to be implemented over a much longer period, with far more publicity, in order to allow people to plan for their retirement under the new TCA calculation method.


Under the TCA, the total amount of social insurance contributions paid by, or credited to, you – rather than the timing of them – will determine the rate of State pension you’re entitled to.


Under the current State pension system, known as the ‘averaging’ system, you can qualify for the full State pension if you have 10 years of social insurance contributions.


An interim TCA system kicked in earlier this year and will apply until the TCA system is implemented in full from 2020.
Under that interim system, 40 years of social insurance contributions are required to qualify for the full State pension.

And a note to strike unease:

…from around 2020 – when the TCA system is implemented in full for those applying for the State pension for the first time – it will no longer be possible for people to choose between the two.
“Most people are assuming that because 40 years’ social insurance contributions are required under the interim TCA, that the same will apply for the TCA system introduced from 2020,” said Tim Duggan, who is the assistant secretary with responsibility for pensions at the Department of Employment Affairs and Social Protection.
“That’s not a valid assumption because no decisions have been made around the parameters for the TCA system in 2020. We’re looking at whether or not 30, 32 or 35 years’ social insurance contributions should be the requirement – we’re looking at everything.”
Duggan confirmed that the Government is also examining whether or not 40 years’ social insurance contributions should be required. However, he stressed that the Government has not decided that 40 years should be the requirement.
“We have an open mind on everything,” said Duggan.

Yeah. Well.

But realistically how does one ‘plan’ for what for many may mean significant cuts in their final state pension?


1. Alibaba - January 23, 2020

Ah yes, to the observant and the dismayed amongst us, the pensions system was always complex and now it’s getting much worse with the dreadful TCA and then plenty more problems with the push for private pensions, getting rid of defined benefits, restrictions on the awarding of credited contributions and so on. It renders planning incomprehensible to the likes of me anyway. By any reckoning 2020 is an awful year for penalising current and would-be pensioners and take note, it affects mostly women who took time out of the workforce to care for family members or raise their kids. 


tafkaGW - January 23, 2020

In other EU countries you get payments credited to your state pension for parenthood. RoI is as ever lagging behind on basic social justice for women and parents generally.


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