# insufficient contributions for full state pension



## oldnick (11 Feb 2013)

Apologies if this question already in previous thread.

Have checked that wife has only enough PRSI  to get ca.40% of old age pension(i know its not called that now) when she reaches 67 -another 11 years time.
And maybe if the govnt keeps changing rules the percent will be even less.

I've been told that all she has to do is get a job which pays a mere € 38 weekly and this will suffice to give her the contributions  that she will need to start building towards a fuller state pension.

 Can one really earn only 38 euros a week in order to -depending on years worked - get a  full state pension worth six times more ? 

Must she be employed or can she be self-employed ? -in which case I'll send her out with a bucket and sponge tomorrow.


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## Firefly (11 Feb 2013)

oldnick said:


> Apologies if this question already in previous thread.
> 
> Have checked that wife has only enough PRSI to get ca.40% of old age pension(i know its not called that now) when she reaches 67 -another 11 years time.
> And maybe if the govnt keeps changing rules the percent will be even less.
> ...


 
I know it's a serious post, but I LOL at this


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## Dr.Debt (11 Feb 2013)

Oldnick, Im not sure if you're clued into the new proposed arrangements  for contributory state pensions. For anyone entering retirement after 2020, its proposed to change the system to a "total" contributions based system, replacing an average yearly contributions based system 

As a minimum everyone will need 520 paid contributions to qualify for a minimum pension. For the maximum pension they will need the equivalent of 30 years contributions, paid or credited.


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## oldnick (11 Feb 2013)

Yes, doctor, that's why i want her to get a bigger total- at present she has only 650 reckonable paid contributions (-as per social welfare list from buncrana which i requested).

This would give her only a percent of the total state pension -though ,when i phoned,nobody could give me precise percent, and the written info i see appears contradictory.

So , if she could increase her total by a few hours work a week over the next few years- roofing, fire-fighting,anything -it would seem a cheap and easy way to get the full state pension.  Is it possible fior under forty euros a week paid employment?


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## Dr.Debt (11 Feb 2013)

Nick, I have no experience of it however it does appear, from reading the rules that this is the case. It does seem too good to be true......


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## Dr.Debt (11 Feb 2013)

Old nick

Basically, for 520 contributions, you are entitled to 1/3 (10/30) of the full pension
For each additional 52 contributions you earn a further 1/30

Based on 650 contributions, your wife has earned around 13/30 of the full pension, based on existing record.
If she works for the next eleven years, that should increase to around 24/30 = 4/5
of the full pension, or 80%.

It really looks like it will make a difference.


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## oldnick (11 Feb 2013)

Thanks for that, so...
If she gets a job paying €38.00 weekly this would count towards state pension. Good.

Unsure whether this €38 can include income from self employment or rental income -class S. Can't find govnt source for stating that class S based on unearned income -e.g. rental- counts towards state pension contribution.


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## Time (11 Feb 2013)

> Unsure whether this can include self-employment -or the PRSI payments on receiving rental income.


That's all good for pension purposes.


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## oldnick (11 Feb 2013)

That's splendid. I hadn't realised that PRSI on rental income (and, i suppose, therefore any other unearned income like deposit interest ) counts towards  the state pension.
Thanks Time and Dr Debt. 

(So,wife doesn't have to seek paid employment in order to earn contributions towards state pension. Maybe I won't tell her that PRSI on rental income counts.)


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## Bronte (12 Feb 2013)

The pensions office in Sligo are very helpful. I'd give them a call and follow up with a letter. You really want to get this right as it will be too late at retirement age. I had in the past to go thought this for my mother and you have to be careful with the social welfare officers as they don't all know the rules (and they've changed down the years).

In addition as far as I know, if someone is unemployed, but seeking work, they are entitled to get 'credited' contributions, even if they are not entitled to any dole. That's just something else to look into. Not sure if it would apply to your wife as she's a landlord as I don't know how that works.  I also believe there was system to buy contributions but maybe that no longer applies.  

For further information you could look up Colm Rapples book or the social welfare website.  In addition Social welfare produce (or used to) a book that lists in detail all rules.  I think you can order this via your local social welfare office or maybe a phone call will get you one.


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## Black Sheep (12 Feb 2013)

Is the rental property/properties in her name only or joint names, it may make a difference.

Voluntary contributions can only be made within one year of the last paid contributions so if there is a gap it may not be an option.

It seems to be very difficult to obtain clear (to me) rules of entitlement for pensions after 2020

Perhaps she should get out the sponge the sponge and bucket and she can continue to do so indefinitely (beyond pension age) to enhance her pension even further.
I would draw the line at ladders!!!!!!!!!!


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## Black Sheep (13 Feb 2013)

Oldnick
Forgot to mention that if wife has any entitlement to Homemakers years (i.e if she stayed at home to look after children born after 1983) this would increase her payment


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## oldnick (13 Feb 2013)

Thanks Bronte , Blacksheep.

I spoke to Social Welfare in Buncrana -who deal with entitlements to state pension based on contributions. 
I'd already received from them records of mine (i'm on pension in two months despite amazing youthful looks and juvenile behaviour) and my wife's (who constantly reminds people she married an older man) contributions -she's11/12 years to go.

Anyway, the staff dealing with records of PRSI payments seem confused about unearned income -rent, deposit interest- as regards entitlement to state pensions.  Took three people and five mins hanging on the phone before one returned to say - "yes, if she earns over 5k p.a., she will gain contributions towards state pension on same basis as if she was working".

I never trust anyone in state employment unless I see it in official writing, and am therefore grateful for all your comments which guides me - and hopefully others - towards getting 100% printed accurate info regarding contributions.

(p.s. Blacksheep - your comment on drawing a line on the ladder made me laugh.          In all truthfulness she *is* often up a ladder wallpapering our 12' ceilings  plus some of the rental properties, which - for a five foot "mature" lady science graduate - she does excellently)


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## Bronte (13 Feb 2013)

oldnick said:


> .
> 
> I spoke to Social Welfare in Buncrana -who deal with entitlements to state pension based on contributions.
> 
> In all truthfulness she *is* often up a ladder wallpapering our 12' ceilings plus some of the rental properties,


 
So they are in Donegal, I was sure it was Sligo I rang before. Are they going to confirm all this complication in writing?

I think it's time your wife retired from wallpapering, - you know you can deduct the cost of labour of same if you don't do it yourself  but it reminds me of my own mother who was in business around the same age as your wife and needed to rent a room and we had to get the bathroom wallpapered and Bord Failte sent out a customer from the UK who was told on no uncertain terms not to arrive before 6 pm, but they couldn't wait and arrived with me up the ladder and my mother holding it. Luckily they thought it was a panic - fawlty towers. What they didn't know was that I'd only tiled the shower the day before. Must have done a good job as they never fell off.


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## oldnick (13 Feb 2013)

Sligo is the main social welfare office,but Buncrana's the place for storing and sending out records of contributions. 

You tile? My wife doesn't. I got a bum deal.


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## Sue Ellen (13 Feb 2013)

oldnick said:


> Must she be employed or can she be self-employed ? -in which case I'll send her out with a bucket and sponge tomorrow.





Firefly said:


> I know it's a serious post, but I LOL at this





oldnick said:


> You tile? My wife doesn't. I got a bum deal.



Firefly,

I remember him back as far as 70's/80s, he ain't jokin and his poor hard working wife is absolutely gorgeous


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## oldnick (13 Feb 2013)

Sue Ellen was only seven at the time.

But she reminds me of the embarrasing fact that although my wife was working in our travel agency (harder than me) I never had her on the books at the time -didn't do things properly in the 80s and probably just assumed that everyone got full state pension at an age that I could never contemplate existed.


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## Black Sheep (13 Feb 2013)

Just happened to be talking to a lady in the pension office to day who told me that they have no details of 2020 onwards, just proposals.
Their only advice is to arm yourself with as many contributions and credits as possible.


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## Firefly (17 Feb 2013)

Sue Ellen said:


> Firefly,
> 
> I remember him back as far as 70's/80s, he ain't jokin and his poor hard working wife is absolutely gorgeous


 
I feel sorry for the youth of today. Back in my late teens rolleyes, early 20s () a favourite pastime of ours was to go into the totty-laden travel agencies in town and pretend to want to go on holiday in order to, ahem, make aquaintance with one of them. No disrespect intended oldnick, respect if anything .


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## Alexmartin (14 Apr 2013)

oldnick said:


> Thanks Bronte , Blacksheep.
> 
> I spoke to Social Welfare in Buncrana -who deal with entitlements to state pension based on contributions.
> I'd already received from them records of mine (i'm on pension in two months despite amazing youthful looks and juvenile behaviour) and my wife's (who constantly reminds people she married an older man) contributions -she's11/12 years to go.
> ...



Seems like a good reason to have an investment property there.
Does the 5k have to be profit or just rental total income of 5k over the year.


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## Black Sheep (15 Apr 2013)

The ruling states "earnings"of over 5K. so I think that would be translated as profit.


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## maryd (31 May 2013)

Could someone explain how rental income helps toward pension contributions or where on Welfare site I would find this info.This is all your fault Old Nick lol..good luck in the future.


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## oldnick (31 May 2013)

Am glad you asked  that question,Mary. 
I also still can't seem to find exact written  info as to what or how  PRSI contributions count towards OAP  on "non-working" or "unearned"income-whether rental income or income from interest earned (i.e. PRSI levied on DIRT).


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## Meath Lady (11 Nov 2014)

Reading this post and have a similar dilemma to Old Nicks wife Wondering did you ever get any further confirmation from Social Protection that rental or unearned income was acceptable for a contribution for pension purposes. My social welfare record dating back to 1979 shows me with D contributions until 1988( as I worked for Local Authority). I ceased work then and will probably be allowed some homemakers years from 1992 to about 1998. I commenced work again in 2005 at age 48 and am still employed paying an A contribution. I have just got 520  now as had a small amount of census work. I have rental income but unsure whether it was all credited to my husband  originally and he is self employed. Any help or advice regarding unearned income and mivxed contributions would be appreciated.


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## Gerry Canning (12 Nov 2014)

This might be of interest.
Under present rules.
If you are classed as self employed you can for 500 per working year buy that years ie 52 contributions. Use a form VC1,from any social welfare office.

Ardarvan , Buncrana is were you can write and get a print out of contribution records.

I suggest everyone should do this.

Sligo , Is where queries seem to be answered .

My experience is that both offices are genuinely helpful.


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## nagel (12 Nov 2014)

one thing on vc's you have to have sufficient paid contributions to be accepted, the rules changed in 2013,  it used to be 260 paid up until April 2013,  It is now increasing by 104 per year until it reaches 520 so for 2015 it will be 368.
  On the income from rental and interest  download  the offline desktop app from the revenue website input your details and it will calculate if you have a prsi charge.


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## dub_nerd (12 Nov 2014)

I was under the strong impression that PRSI levied on unearned income (rent or deposit income) did _not_ qualify for any benefits such as contributory pension. 

I am going by this page which says:

"_Anyone with unearned income of over €3,174 is considered to be a 'chargeable person' and is liable for the new 4% PRSI charge. They pay the charge under Revenue's self-assessment system (Pay and File). The new PRSI charge is paid at Class K and does not entitle the person to any social insurance benefits._"

If anyone knows different I'd like to hear it, since it affects me.


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## nagel (12 Nov 2014)

have a read of sw 74


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## dub_nerd (13 Nov 2014)

nagel said:


> have a read of sw 74


Ok, SW74 makes it all a bit stranger. If you are self-employed, and earning more than €5,000 p.a., you pay class S contributions on all your income, both earned and unearned, and these count as payments toward pension entitlements. If you are in PAYE employment, previously you didn't pay PRSI on unearned income, but now (from 2014) you pay them at class K which does _not_ confer any entitlements, although you probably have entitlements from your Class A payments on your PAYE income. If you are _unemployed_, you can get PRSI credits to count towards entitlements.

But if you are _not_ employed and not seeking work (like me) you now have to pay PRSI at Class K on unearned income even though it entitles you to nothing. Furthermore, you can't pay voluntary PRSI at €500 unless you were previously self-employed (which I wasn't). So I can't get any credits in spite of paying thousands in PRSI each year. Seems a bit unfair. I guess the option is to try to find self-employment worth at least €5,000 for one year, and then pay voluntary contributions thereafter. (I don't think I can just declare myself to be self-employed but getting nothing other than unearned income).


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## 1dave123 (13 Nov 2014)

Hi - Unless I am overlooking something my reading of the attached is that u can make voluntary PRSI contributions if you were previously employed (i.e. being previously self employed is not a requisite).   

http://www.welfare.ie/en/Pages/Voluntary-Pay-Related-Social-Insurance-PRSI-Contributions.aspx


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## nagel (13 Nov 2014)

Yep its hard to get  definite information on this , but  if you have unearned income in excess of 5000  say from interest  you can pay s rate prsi,  as per  the revenue offline desktop app  I mentioned earlier, and as far as I know  if your total income is from interest you can declare yourself self employed, (self employed investor) likewise if your interest doesn't make 5000 would it be an option to make up the difference doing odd jobs.
One further complication , if you happen to be on a pension  even with 5001 interest or rental   then you wont pay s class prsi, however if you make even 1 euro from a trade or business you will then pay s rate, again you can run all these figures in the revenue app


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## Meath Lady (13 Nov 2014)

Thanks for all the input. Reading all this with great interest. I too was of the opinion that once you gave up /lost your job you could make voluntary contributions once you commenced within a year. any further input appreciated. Thanks


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## dub_nerd (14 Nov 2014)

Meath Lady said:


> Thanks for all the input. Reading all this with great interest. I too was of the opinion that once you gave up /lost your job you could make voluntary contributions once you commenced within a year. any further input appreciated. Thanks



Yes, you can always pay voluntary contribs but the €500 only applies if you were paying Class S. If you were in PAYE employment it's 6.6% of previous year's salary and I gave up a job paying hundreds of k.



nagel said:


> Yep its hard to get  definite information on this ,  but  if you have unearned income in excess of 5000  say from interest   you can pay s rate prsi,  as per  the revenue offline desktop app  I  mentioned earlier, and as far as I know  if your total income is from  interest you can declare yourself self employed, (self employed  investor) likewise if your interest doesn't make 5000 would it be an  option to make up the difference doing odd jobs.


That's interesting, and something I didn't know. Thanks. Will check it out.

EDIT: Just checked Form 11. There _isn't_ any place to declare yourself self-employed that I can see. You just submit your income and accounts from self-employment. If you don't have any, presumably you are not self-employed.


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## nagel (14 Nov 2014)

have to register as sole trader/self employed with revenue first their  website has details


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## Eeyore (14 Nov 2014)

dub_nerd said:


> But if you are _not_ employed and not seeking work (like me) you now have to pay PRSI at Class K on unearned income even though it entitles you to nothing. Furthermore, you can't pay voluntary PRSI at €500 unless you were previously self-employed (which I wasn't). So I can't get any credits in spite of paying thousands in PRSI each year. Seems a bit unfair. I guess the option is to try to find self-employment worth at least €5,000 for one year, and then pay voluntary contributions thereafter. (I don't think I can just declare myself to be self-employed but getting nothing other than unearned income).



I am in the same position at the moment i.e. not employed and not seeking work but I have been able to register as a homemaker which means that the time until my youngest turns 12 will be taken into account for the contributory pension.


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## orka (14 Nov 2014)

dub_nerd said:


> Yes, you can always pay voluntary contribs but the €500 only applies if you were paying Class S. If you were in PAYE employment it's 6.6% of previous year's salary and I gave up a job paying hundreds of k.


This has always struck me as very unfair.  Two people unemployed - one from a low paying job and one from a high-paying job - one can keep their PRSI contribution record going by paying 250/500 a year but the other person might have to pay 10K+ (every year until retirement/full contributions) for the exact same benefit accrual.
One possibility for the higher paid person is to wait a year and get a low paid job for a short period of time (Christmas job in Boots/Dunnes/Argos?).  That low paying job will then be the reference for future voluntary contributions.


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