REVEALED: Major changes to state pensions will come into effect on January 1st

Major changes to state pensions are due to come into effect on January 1st. 

That's according to the Minister for Social Protection, Heather Humphreys, who today (December 29) announced new flexible pension arrangements for people turning age 66. 

The new flexibility allows people to defer claiming the State Pension (Contributory) to receive an actuarially adjusted higher payment rate up to age 70. 

The change also allows people to potentially increase their rate of State Pension payment when they retire, or allow those who started working later in life to make additional contributions to qualify for a State Pension (Contributory). 

Minister Humphreys said, "The main aim of this change is to provide people with more choice. Those who wish to get their State Pension (Contributory) at age 66 can still do so. They also still have the option of continuing to work. What’s new from today is the option to delay the date on which people start receiving their State Pension (Contributory). 

"It may seem like the obvious choice to start receiving your pension payment as soon as you’re eligible, but this won’t be right for everyone. For example, being able to work longer and continuing to pay PRSI gives people the chance to build up contributions and potentially increase their State Pension payment rate.

"Or you may have entered the workforce later in life and may not have the required contributions to qualify for a pension at 66."

"These new options will allow you an additional four years to build up social insurance contributions to meet the qualifying criteria, which you wouldn’t previously have had the option to do. And, deferring your pension date to fall between 67 and 70 may result in an enhanced rate of payment if that’s what you want to do." 

The changes are being introduced for those who turn 66 from January 2024, meaning the first people to be eligible for a higher rate will be those who turn 67 in January 2025. 

Based on a person qualifying for the maximum rate of €277.30 State Pension (Contributory) on reaching age 66 on or after January 1st 2024, the proposed maximum rates for each year of deferral are: 

• €290.30 at age 67
• €304.80 at age 68
• €320.30 at age 69 
• €337.20 at age 70 

It should be noted these rates of payment are subject to change in future budgets.