How do I work out my 'yearly average'?


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A 'yearly average' is the average number of reckonable contributions paid or credited from when you first started paying social insurance to the end of the tax year before you reach age 66.

To calculate your 'yearly average':

  1. count the number of tax years beginning with the year you first started paying social insurance up to and including the tax year before you reach age 66,
  2. count up all the reckonable contributions paid or credited over these years,
    and
  3. divide the number of reckonable contributions and credits (2) by the number of tax years (1).

Note
Class S PRSI contributions for self-employed people, were introduced on 6 April 1988. If you paid Class S PRSI on 6 April 1988 and have 52 Class S contributions in the 1988/89 tax year and a total of 260 contributions paid since that date, your "yearly average" can be calculated from the start of the 1988/89 year and any earlier periods of employment will be ignored if it helps you to qualify for a higher rate of pension.

Example 1

A person started paying social insurance for the first time on 7 August 1963. They reach age 66 on 12 June 2008. The last tax year before they reach age 66 is the 2007 year.

  1. Counting from the 1963 tax year up to and including the 2007 tax year gives a total of 45 years.
  2. They have a total of 1,260 reckonable contributions.
  3. Dividing 1,260 contributions by 45 years gives a yearly average of 28 contributions. Based on this record they will qualify for 98% of the standard rate State Pension (Contributory).

Based on this record they will qualify for 98% of the standard rate State Pension (Contributory).

Example 2

A person started paying social insurance for the first time on 8 February 1962. They reach age 66 on 10 April 2008. The last tax year before they reach age 66 was the 2007 tax year. They have contributions recorded at the 'ordinary' rate up to 1965. They have PRSI contributions recorded at Class S from the 1988/89 year (52 for that year) up to and including the 1999/2000 year.

  1. Counting from the 1962 tax year up to and including the 2007 tax year gives a total of 46 years.
  2. They have a total of 858 reckonable contributions.
  3. Dividing 858 contributions by 46 years gives a yearly average of 19.

Based on this record they would qualify for 75% of the standard rate State Pension (Contributory).

However, as they started paying Class S PRSI on 6 April 1988 and have 52 Class S PRSI contributions in the 1988/89 year, it is better for them to ignore earlier social insurance contributions.

  1. Counting from the 1988/89 tax year up to and including the 2008 tax year gives a total of 20 contribution years.
  2. They have a total of 624 reckonable contributions in this period.
  3. Dividing 624 contributions by 20 years gives a yearly average of 31.

They now qualify for 98% of the standard rate State Pension (Contributory).

Last modified:19/08/2011
 

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