# Class S Pension



## johnkellyof (21 Sep 2013)

Hi guys
I am self employed and for tax purposes for years I have filled in form 11 including my spouse. My wife is fully occupied in the home for the last 12 years and will be for many years to come as we have 4 kids youngest still only 4 years old.
I assume I will qualify for a full state pension as I make class S contributions but what will my wife's position be when we retire in 20 years time?


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## Steven Barrett (21 Sep 2013)

Hi John

If you pay PRSI, you get the contributory pension. You'll be 68 when you get it. If your wife has any working history, she may be entitled to something small. Otherwise, she can apply for the non contributory pension, which is means tested. 

Links to the welfare site below. 

http://www.welfare.ie/en/Pages/State-Pension-Contributory.aspx#l62fd2

http://www.welfare.ie/en/Pages/248_State-Pension-Non-Contributory.aspx


Steven
www.bluewaterfp.ie


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## johnkellyof (21 Sep 2013)

Thanks Steven
The thing is my wife does a lot of work related to my business as she answers the phone most of the time while I am working and also does a lot of paperwork including accounts. We were thinking of declaring her as self employed and paying her some money every year for her work out of the expenses from my own business. Would that make sense in order for her to qualify for a state pension? If so how much would she have to be paid each year in order to have enough prsi paid to qualify for a full state pension?


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## Joe_90 (21 Sep 2013)

A husband could not engage a spouse as self employed in these circumstances, she is an employee, this is not insurable employment and therefore can't attract PRSI so the simple answer is no.

Perhaps you could consider a partnership which would give you both a contribution assuming you earn over €5,000 or a company where you both get a salary.


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## Steven Barrett (21 Sep 2013)

N/a


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## johnkellyof (21 Sep 2013)

Joe_90 said:


> A husband could not engage a spouse as self employed in these circumstances, she is an employee, this is not insurable employment and therefore can't attract PRSI so the simple answer is no.
> 
> Perhaps you could consider a partnership which would give you both a contribution assuming you earn over €5,000 or a company where you both get a salary.


Hi Joe
My wife would be a self employed sole trader and she would send me a vat invoice for secretarial work. Are you saying there is a rule against it?


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## Joe_90 (21 Sep 2013)

Not being smart but just because you say she is self employed does not make her self employed!
Revenue will look at the merits of the case, but your wife working for you in your own home is an employee, Revenue are all over this area.  Have a look at [broken link removed]


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## Steven Barrett (21 Sep 2013)

Joe is right. You can employ her as she does work for you. You would have to pay employer's PRSI on her pay. If your earnings are high enough though you can benefit from a higher standard rate of tax threshold and your wife can fund for a private pension.

The revenue have been looking very closely at people claiming to be self employed when they are in fact employees. Your case is a classic example. Go through the checklist. Get proper advice from your tax adviser before doing anything.


Steven 
Www.bluewaterfp.ie


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## johnkellyof (21 Sep 2013)

Ok guys I see what you mean. 
If I put her down as an employee how much would she have to be paid in order to qualify for the maximum state contributory pension?


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## Joe_90 (21 Sep 2013)

At the risk of repeating myself, if a husband employs his wife it is not considered insurable employment so you CAN'T make a PRSI contribution on her behalf.


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## gipimann (21 Sep 2013)

Under the current rules for State Pension, you could claim an increase for your wife, as a qualified adult, if she has no income or entitlements of her own.


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## johnkellyof (21 Sep 2013)

gipimann I have been reading about the qualified adult and that may be the way to go however in order to maximise this entitlement we would not be able to own any assets other than the family home by the looks of it.


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## johnkellyof (21 Sep 2013)

Joe_90 said:


> At the risk of repeating myself, if a husband employs his wife it is not considered insurable employment so you CAN'T make a PRSI contribution on her behalf.


sorry I misunderstood, I thought it was self employed you were referring to and didn't realise I couldn't even employ her at all.


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## gipimann (22 Sep 2013)

Savings, investments and property are means-tested to determine an entitlement to a qualified adult payment, but it doesn't mean that a person can't hold anything other than the family home - there is an amount disregarded, and the means assessment isn't "euro for euro".

Given that you're talking about retirement 20+ years ahead, there is no way of knowing what the rules might be at that time.


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## johnkellyof (22 Sep 2013)

True and it is pretty hard to understand the rules as they are today as well.


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## Gervan (22 Sep 2013)

The Homemakers Scheme ( https://www.welfare.ie/en/Pages/Homemakers.aspx) which covers up to 20 years looking after your children in the home, will benefit your wife's calculated average when it comes to working out her pension entitlements. 

At present at least 10 years contributions must have been paid, so your best option is to set up a partnership, so your wife can pay Prsi towards her own pension. As your business income will now be split between you, it may not be any more expensive than you paying sole Prsi, and you will both benefit.


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## johnkellyof (23 Sep 2013)

thanks for that Gervan
One question, she is qualifying as a home maker for the past 11 years and will be for the next 8 years or so. Does this mean there is no point in setting up the partnership till this homemaker period ends?


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## gipimann (23 Sep 2013)

You should confirm whether she qualifies for homemaker credits at the moment.  The usual procedure is for a parent/guardian to apply for homemaker credits before the end of the tax year following the last working tax year.  As your wife has been out of the workforce for some years, you should check to see if homemaker credits can be applied.

That may have a bearing on what you do next.


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## Gervan (23 Sep 2013)

If your wife is receiving children's benefit, she doesn't have to register.



> You do not need to register if you:
> 
> 
> Are getting Carer's Allowance,     Carer's     Benefit or the Respite Care Grant
> ...



Despite the home-maker scheme, I think your wife would be better advised to start paying Prsi sooner rather than later, as rules will almost definitely change in the future. 
When the income is split between you, I don't think you will actually be paying any more Prsi, but you will both be benefitting. 
It's not the amount of Prsi that qualifies you for a pension, but the number of contributions.


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## johnkellyof (23 Sep 2013)

Ok Gervan thanks for that advice


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