imageWomen work outside the home in fewer numbers, they get paid less when they do work and, when it comes to retirement, women typically have 35 per cent less to live on than men.

The past four decades have witnessed a seismic change in women’s participation in the workforce but women are still financially less well off than men, and given the impact of maternity, parental and other caring roles, women will likely continue to have a fractured relationship with work. This means that when it comes to retirement, women will continue to fare worse than men.

While much attention is given to the gender pay gap (about 14 per cent in Ireland), the problem is far more pronounced at pension age, with women earning 35% less than men in retirement.

One way of narrowing this gap is to ensure more women qualify for a full contributory State pension.

While there are fears about its future viability, one fact that might whet your interest is this: to replace the State pension in its current form, you would need a private fund of about €300,000.

It’s one of the biggest entitlements you will ever get, far more than anything you might earn via maternity benefit, jobseekers’ allowance or even child benefit. So don’t let your benefit be whittled away by failing to take action to ensure that you qualify for the top rate of pension.

So what can you do to ensure you won’t be one of those women?

 

KNOW WHAT YOU'RE ENTITLED TO:

Yearly average contributions (SPC)

Personal Weekly Rate

Increase for Qualified Adult Aged under 66

Increase for Qualified Adult Aged 66 or over

48 or over

€248.30

€165.40

€222.50

40-47

€243.40

€157.40

€211.40

30-39

€223.20

€149.80

€200.50

20-29

€211.40

€140.10

€188.70

15-19

€161.80

€107.80

€144.50

10-14

€99.20

€65.70

€89.50

 

As the table above shows, the top rate of the State pension currently pays out €248.30 a week. But not everyone is entitled to this, and depending on your level of contributions, you may find that you only qualify for a lower rate.

Typically, you will need at least 520 paid contribution weeks to qualify for a pension. This is up significantly on the 260 contributions needed up until 2012, and will likely work against many women who have spent time out of the workforce. To get the top rate, you will need a yearly average of 48 paid or credited contributions from 1979.

You can request your own contribution record using your MYGOVID account, which you can access here https://www.mygovid.ie/en-IE/WhatIsMyGovId

Once you have this you can ring the department for guidance on whether or not your contributions will be enough.

 

You may not receive your pension until you’re 68

 With the State pension a considerable burden on the country’s finances, Ireland made a move in recent years, much like other countries around the world, to push out the age at which you are entitled to the weekly benefit.

This means that if you retired before 2021, you are entitled to the State pension at the age of 66, up from 65 previously. Thereafter, the qualifying age will rise again, up to 67 from 2021, and possibly 68 in 2028. It has a considerable financial impact, leaving you short up to €35,000 that you would otherwise have been entitled to. So, if you were born anytime after 1955 you’re going to have to wait for two, if not three, years more than pensioners today to get your pension.

If you’re able to stay in your job, this change may have little impact on you. But as of yet, employers have not responded in large numbers to the change, meaning that you may be forced into retirement at the age of 65. This means that you have may have three years in the wilderness so to speak, when you’ll have to fund your living expenses either through private pension savings, or by signing on for jobseeker’s allowance.

 

Stay at home mums need to get back into the workforce

Introduced in 1994, the homemaker scheme makes it easier for women – and men – who have spent a number of years outside the workforce caring for children to qualify for a contributory State pension.

This means that if you decide to take some years out of the workforce following the birth of your children for example, this scheme helps protect your contributions by disregarding any years spent providing full-time care for a child under 12, or a disabled person over the age of 12. Up to 20 years can be disregarded when the yearly average number of contributions for a contributory pension is being calculated, which can help you qualify for a pension, or a higher rate of pension.

Typically, you won’t have to apply for it: if you are already claiming child benefit, carer’s allowance or carer’s benefit, or a respite care grant, you will automatically be entitled to it. Normally, child benefit is registered in the child’s mother’s name.

If you do need to register for the scheme (you can apply here: https://www.gov.ie/pdf/?file=https://assets.gov.ie/26445/16f63006c68b48d5b9b5a0e7bd9ab778.pdf#page=1

Remember that you will need to do so within a certain time frame. You must do it before the end of the year after the year you first became a homemaker. So, for example, if you opted to stay at home this year, you will need to register by December 31st, 2022.

But you have to return to work for the homemaker’s scheme to be effective. According to the department, while you are not obliged to return to the workforce immediately after the homemaker period ends (ie after 20 years), if you have an insurance record gap of more than two years the credited contributions you earned during your homemaker period can’t be used for pension assessment purposes until you go back to work again, and pay a minimum of 26 contributions.

So, to avail of this scheme, you have to re-enter the workforce at some point.

 

Maternity leave won’t affect your pension rights – so apply to get credits

If you take time out of the workforce (for maternity or parental leave), your employer may continue to make pension contributions on your behalf. But what happens to your State pension?

First of all, if you’re not getting paid during maternity leave, then you won’t be paying PRSI, and you won’t be building up credits for your State pension. However, you may qualify for credited contributions, which are just like the PRSI contributions you pay while you are working.

If you get maternity benefit, you will get credits automatically. However, as this ends after 26 weeks, if you take a further 16 weeks unpaid leave you will need to get your employer to complete the application form for maternity leave credits when you return to work.

According to the Department of Social Protection, while a credited contribution per week is allowed during this period of unpaid leave, “this additional credited period must be applied for on the person’s return to work”. So, don’t just assume that your payroll department will apply on your behalf, check if they have done so to ensure that your record remains intact.

When it comes to parental leave, you should also be entitled to credits – but again, you have to apply for these. Parents can take 18 weeks of parental leave, which is typically unpaid, for each child up to the age of eight and they are entitled to a credit for each week of leave they take. So make sure your employer writes to the client eligibility services unit at the Department of Social Protection in Buncrana, Co Donegal, confirming the duration, number of weeks and dates of your parental leave.

 

You may qualify for a pension through your spouse

If you are married but don’t qualify for a pension in your own right, you may be entitled to get an increase on your spouse’s pension, known as a “qualified adult” pension. This is offered at a lower rate of up to €222.50 a week.  However, the payment is means-tested and some women may struggle with the concept of continuing to be dependent on their husband in retirement.