How the Irish pension system works
The State Pension (Contributory) is paid from 66 and depends on your PRSI contributions (your “stamps”). Under the Total Contributions Approach, your counted contributions are divided by 2,080 (40 years) and multiplied by the maximum rate: €299.30 a week in 2026, rising to €309.30 from January 2027 under Budget 2027. You need at least 520 paid contributions; credits count up to 520, and credits plus HomeCaring Periods up to 1,040. If you start drawing it before 2034, you get the better of this result and a blend with the old yearly-average method. Deferring raises the rate, up to €363.90 a week at 70. There is no early State Pension, so retiring before 66 needs bridging capital, which the calculator includes.
Since 1 January 2026, employees aged 23 to 60 who earn at least €20,000 and are not in a payroll pension are auto-enrolled in MyFutureFund. You, your employer and the State pay 1.5%, 1.5% and 0.5% of gross pay up to €80,000, 3.5% in total, rising every three years to 14% from 2035; the fund pays out at 66. If you are in an employer scheme or a PRSA through payroll instead, the calculator assumes 10% of salary, 5% of it from you. Without your own figures it counts 52 PRSI contributions for each working year; your contribution record on MyWelfare.ie, the Department’s weekly State Pension forecast and your scheme statement or balance make the result exact.
The State Pension rate is set in each Budget and is not indexed by law, so the calculator takes the 2026 rates and assumes they keep their purchasing power, which means they fall relative to wages. To close the remaining gap it first uses a PRSA or additional voluntary contributions (AVCs): these get income-tax relief at your marginal rate (not on USC or PRSI) up to 15% of earnings under 30, rising with age to 40% from 60, on earnings up to €115,000 and minus your own workplace pension contributions. Anything above that goes into unrestricted saving. The calculator adds up all the pillars, compares the total with your target share of your last salary and shows the monthly saving you need.
The State Pension is subject to income tax but not USC, and no PRSI is due from 66; an age tax credit applies, and from 65 low incomes are exempt from income tax. Other pensions also pay USC.