Q&A

Why are insurers reluctant to provide contents cover to tenants in rented accommodation? Surely they are missing out on a huge section of the home insurance market.

Renting and insurance

Do you know of any insurers who will provide this cover for a flat in a converted house?

Mr R.B., email

Insurance is an actuarial business. The decision to enter a particular sector and the prices charged are determined by the assessment of the probability of the risks involved occurring.

The only things that might undermine this approach are an overdependence on investment performance by the insurers to compensate for lower premiums offered to attract custom from competitors, as happened in Ireland through the 1990s, or a drive to improve profitability by increasing margins. This can generally only happen in a market with little competition and, despite several allegations to the contrary, such a situation has never been proven in Ireland.

So why are insurers reluctant to cover contents for tenants in rented accommodation? The simple answer is that the insurance companies consider the risks are too great.

You are right that it means insurers are missing out on a sizeable chunk of business available but no business is worth having at any price and as anyone with experience of shared accommodation will attest to, things tend to go missing with greater regularity than they do in single unit accommodation.

As it stands, you will find it almost impossible in Ireland to find an insurer willing to provide contents cover for unrelated people, such as students, in a shared house. It is similarly difficult for a broker to arrange cover for tenants in multi-unit accommodation, such as a single house split into bedsits.

The two groups that did provide such cover, including the British insurer Endsleigh (originally set up in 1965 as an offshoot of the British National Union of Students), pulled out of the market in 2002 and 2003.

It is still possible for a couple renting a purpose-built apartment to find cover, although tenants will probably find themselves paying higher premiums.

In general, the only way people in shared accommodation or a multi-unit dwelling can get cover is as an extension to cover elsewhere, such as their parents' house.

State pension

I hope to be able to go into some kind of semi-retirement by age 50 or possibly even sooner. Between my retirement date and age 65 I expect to either earn nothing or be self-employed (possibly via a shelf company with no other employees or shareholders besides myself).

I have never been able to understand what I can reasonably expect to be entitled to in terms of a state pension at 65 if that is how my life works out - can you advise? I've worked most of my life in PAYE employment in the State (1982 through August 1995 and Sept. 98 to date and probably till 2007 or so).

Mr P.O'R., Cork

For most PAYE workers, the essential entitlement from the age of 66 is the contributory old age pension. You can qualify for the retirement pension from the age of 65 but it carries a stipulation that you are retired from full-time employment, although you can earn up to €38 a week part-time or €3,174 a year if you are self-employed.

Once you hit 66, the employment conditions are dropped. More importantly, however, both entitlements carry conditions relating to social insurance contributions.

This is where the real fun starts.

For the retirement pension, under current rules you must have started paying PRSI contributions before you reach the age of 55 - a factor that clearly is not an issue for you.

You also need to have paid 260 full-rate contributions. In addition, for a full pension, you need to have 48 full-rate contributions to your name each year between 1979 and the end of the tax year before your 65th birthday.

You could still receive the minimum retirement pension payment if you had 24 contributions for every year of employment from 1953 or whatever later date you first commenced employment to the end of the tax year before your 65th birthday.

The key point in this latter situation is that the contribution history dates back to your first employment. So, if you took a taxable position as a student and then stopped work for a number of years to study, raise a family or otherwise, you would have to ensure you had sufficient contributions to cover the gaps.

Not that it affects you, but time taken out of employment since April 6th, 1994 to care for a child up to the age of 6 is disregarded when calculating the annual average for contribution purposes.

A further complication is that the rules are changing so that people who reach pensionable age after April 6th, 2012, you must have a minimum of 520 contributions, although some of these can be made up with voluntary contributions.

Everything clear. Good. Now, the rules of the contributory old age pension scheme are broadly the same as those for the retirement pension scheme outlined above with a couple of differences.

First, you have to have started paying contributions before you reach the age of 56 and the annual average of 48 contributions for a maximum pension relates to the period from 1979 to the end of the tax year before your 66th birthday.

More significantly, you can still get a minimum old age contributory pension if you have at least 10 full rate contributions from the time you started employment (or 1953, whichever is the earlier).

As you can see, it is a minefield - and we haven't even discussed credited contributions and half-pensions for people with pre-1953 contributions, neither of which appear to apply to you.

What might affect you is pro-rata pensions. If you worked in an EU state or a state with which Ireland has a bilateral agreement on social security (such as the US, Canada, Australia and New Zealand) between August 1995 and September 1998, social insurance contributions paid there might help you qualify for an contributory pension here - although the precise conditions depend on the country in which you worked.

In any case, if you do meet the criteria for a contributory old age pension or retirement pension, it is not means-tested.

If, however, you do not meet the requirements, you might still be eligible for a non-contributory old age pension. The rates of payment are lower and it is a means-tested payment.

The Department of Social and Family Affairs does publish a booklet on the issue - SW18 - which is available from the Department or its website at www.welfare.ie/publications/sw18.html.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.