Calculating your pension income
Example 1:
You have a compensation package that consists of a salary, petrol allowance, overtime, and a performance bonus. In 2016 the total income earned from your employer was €15,300. This consisted of:
- Salary €13,000
- Petrol Allowance: €500
- Performance Bonus: €800
- Overtime: €1,000
You do not pay the 10% social security contribution on €15,300. You pay your 10% social security contribution on your salary of €13,000. Thus, the annual social security contribution you will pay is €1,300 and not €1,530.
The 10% social security contribution you pay on your salary is capped. This is known as the Maximum Pension Income.
Following the 2007 pension reforms, there are in place two Maximum Pension Income caps. These are :
If you are born between 1952 and 1961 than the Maximum Pensionable Income cap is €18,024.
If you are born on and after 1962 you will retire in after 2027. It is estimated, on the basis of a three year average, that in 2027 the Maximum Pensionable Income will be €26,442.
The table below shows the estimated pension income you are entitled to on retirement: