State pension 2024 changes: Increase, flexibility and new calculation

In this article we are going to explore the changes introduced to the pensions system in the 2024 Budget and Financial Bill. In addition, our Budget 2024 article provides more of an overview of the changes introduced.  

Zurich has been operating in the pension industry in Ireland for over 40 years. The Investment and Pension Provider Excellence Awards from Brokers Ireland, 2023 are just some of the many industry awards we have won during this period1.

The contributory State pension increased in January 2024 

From January 2024, the State Pension (Contributory) personal rate increased by €12 per week to €277.30 per week. It is equal to an annual increase of €624. Prior to 1st January 2024, the State Pension (Contributory) personal rate was €265.30 per week2.

The contributory State pension becomes more flexible 

In late 2023, the Department of Social Protection introduced some flexibility to the age at which the State pension becomes payable. From 1st January 2024, people born after 1st January 1958 can choose when they would like to begin receiving their State Pension (Contributory) at any age between 66 and 70. For people born before 1st January 1958, the State pension age remains 66 (and no deferral is possible)3.

These changes aim to provide people with more choices and potentially increase their State pension payments when they retire. It also means that for people who started working later in life, they will now be able to work longer in order to qualify for the State pension.

Until now, Pay Related Social Insurance (PRSI) contributions ceased at age 66 in line with the start of the State pension payments. However, the deferral of the State Pension (Contributory) means that people reaching age 66 after 1st January 2024 will continue to be liable for PRSI if they decide to defer the State pension beyond their 66th birthday. This also means that their employers (where applicable) will also continue to be liable for employers PRSI. PRSI will continue to be paid until the point that they are awarded the State pension – right up to age 70.

Delaying the start of State Pension (Contributory) means:

  • An increased State pension will become payable at a later stage following the deferral period.
  • PRSI will continue to be payable beyond age 66 (until such time as they decide to draw down the State pension) – but this gives people an opportunity to continue to pay PRSI which may improve their PRSI contribution record when they do eventually start their State pension.
  • Those that reach age 66 but have no State Pension (Contributory) entitlement as they do not have a sufficient PRSI record of the required PRSI class, will continue to pay PRSI until the earlier of their 70th birthday, or the date on which they become entitled to the State pension and receive payment of same.
  • The impact on withdrawal payments from Vested- Personal Retirement Savings Accounts (PRSAs) and Approved Retirement Funds (ARFs) on reaching age 66 (on or after 1 January 2024), means eligibility for the State pension, and decision as to whether (or not) to defer commencement of the State Pension (Contributory), will impact a person’s PRSI status in the context of taxation of payments from Vested-PRSAs and ARFs.

As mentioned, from 1st January 2024, qualifying and eligible residents can decide to retire between the age of 66 and 70. People can decide to work more years and see the rate of their State Pension (Contributory) personal rate increase to a maximum of €337.20 per week3. See table below for what that means in monetary terms:

Retirement age






Maximum weekly pension rate








These are the pension rates as of January 2024 and may change in future budgets. Read Minister Humphreys press release for more information. 

Long term carers contribution 

From January 2024, if you have cared for someone for 20 years or more, you may get a long-term carers contribution on your PRSI record for each week that you provided full-time care4. These contributions can only be used to help you qualify for the State Pension (Contributory). More information on Long-Term Carers Contribution can be found here.

Employers and employees PRSI contributions are increasing by 0.1% from October 2024

All PRSI contribution rates – regardless to whether you are an employee, an employer, or self-employed – will increase by 0.1% from 1st October 20246. The purpose of this increase, according to the Government, is to replenish the Social Insurance Fund and to support the retention of the State Pension Age at 66 going forward5.  

As part of the Governments PRSI Roadmap, there will be incremental increases in all classes of PRSI (employer, employee and self-employed) over the coming years6. They are as follows:

  • 2024: 0.1%
  • 2025: 0.1%
  • 2026: 0.15%
  • 2027: 0.15%
  • 2028: 0.2%

Pensions will be calculated with the total contributions approach from January 2025

In addition to the above changes, the Government also announced a new method for people to calculate their State Pension (Contributory). 

From January 2025 there will be a 10-year phased removal of the Yearly Average Method (YAM) of calculating contributions7. This means that all pensions will be calculated using only the Total Contributions Approach (TCA) by 2034.

During the 10-year transition period, pensions will be calculated using two methods. You can find more information on how this new system will work here.

The information contained herein is based on Zurich Life’s understanding of current Revenue and Dept of Social Protection practice as at May 2024 and may change in the future.


1Investment Provider Excellence Award, Brokers Ireland, 2014, 2015, 2016, 2017, 2018, 2019, 2021, 2022, 2023. No awards held in 2020. Pension Provider Excellence Award, Brokers Ireland, 2023. State pensions available in Ireland Changes to contributory State pension

4Citizens Information: Contributory State pension Social Welfare reforms Changes to Pay Related Social Insurance (PRSI) Contributory State pension calculation

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